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Marketing benefits everyone!

Abstract In the last two decades over 170 marketing laws have come into existence, most have

gone unnoticed by marketers and the small and medium sized enterprises (SME’s). Few are aware of these laws and how they will affect their communications with the consumer and more recently, business-to-business. Whilst the focus for lobbying remains on red tape surrounding areas such as health and safety, many marketing laws have been passed through Brussels and Gold Plated in the UK. Alarmingly, most remain unchallenged by the marketing profession or the SME lobby groups. Most concerning are the marketing laws prohibiting the freedom of business–to-business communications.

In order to understand the current and future situation on marketing laws in this area and the effect on the SME community, many in-depth interviews were conducted with SME’s, members of the House of Lords and marketing institutions. The results were very concerning and found laws such as the Corporate Telephone Preference Service (CTPS) to be disproportionate and damaging to business-to-business communications and with the SME playing a central role in the UK economy, this is potentially damaging to the UK economy as a whole. The paper concludes that there are wider implications, as marketing laws initially meant to protect the consumer are slowly creeping into the business-to-business arena. If registrations continue at the current rate in areas such as the CTPS, then communications between businesses could grind to a halt. The impact of this on the UK economy would be catastrophic and result in stifling innovation, product development, collaboration, competitiveness and most importantly sales transactions between

businesses.

Gerry Brierley Dip.M MA FCIM MIDM

January 2009

MERCATURA ADIUVAT OMNES

MERCATURA ADIUVAT OMNES Gerry Brierley Jan 2009

© Gerry Brierley 2009 2 of 146

Acknowledgments My thanks go to the Worshipful Company of Marketors for giving me their most prestigious award of the Mais Bursary in 2006 to allow me to complete this important paper. To all those who participated so enthusiastically and gave me a real insight to marketing laws and the workings of parliament; they include Lord McNally Leader of the Liberal Democrats party, the House of Lords, for his generous time and most balanced approach to marketing laws, along with providing some hope that we may be able to change the future of these laws; to Rosemary Smith Chair of the DMA and Managing Director of Opt-4 for her depth knowledge, experience and support on the subject; to Phil Orford, CEO of the Forum of Private business, for his openness, interest and commitment to the cause; to Lord Cotter for providing an insight to his experience as spokesperson for the SME community for the Liberal Democrats; to Sally Muggeridge, CEO of the Industry and Parliament Trust, for the incredible work that she does and for answering my questions with such a breadth of knowledge; to Sir Paul Judge, President of the Chartered Institute of Marketing and Past Master of the Worshipful Company of Marketors, for being so generous with his time during his holiday and sharing his paper on Gold Plating; to Ed Weatherall, Chair of the Institute of Direct Marketing business–to-business and Managing Director of Concep, for his depth understanding and sound approach to marketing laws; to Clive Mishon, Chair of the Institute of Sales Promotion, for taking such an interest and providing another angle to the research; to Danny Lopez, CEO of UK Trade and Investment, who kindly deputised for Lord Digby Jones in his absence and provided a very sound common sense approach to business and Government; to Edward Fulbrook Marketing Director of Link Direct for providing a different perspective; to both Richard Payne-Gill Marketing Director (at the time of interview) and Khurram Arram Head of Compliance at LBM Limited for their commitment, trust, openness and time they spent discussing their company’s experiences; to the Chartered Institute of Marketing library for the extent and quality of the data held, and finally to my mentor nominated by the Worshipful Company of Marketors, Roger Alexander, Chairman of Lewis Silken. Gerry Brierley, 2009

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Contents

Abstract Acknowledgements Executive Summary…….................................………...……………………...4

Introduction .......................................................................................... 8 Marketing law, the marketers and the lawyers – who should take responsibility?....................................................................................... 9 What Level of Awareness do Marketers have about Marketing Laws and in Particular, the CTPS? ...................................................................... 14 Given the current marketing laws, in particular, the CTPS, how are businesses managing to effectively communicate their offering?........... 20 What is the future for CTPS – is there light at the end of the tunnel for UK PLC?.............................................................................................. 30 The SME community – marketing law and the SME community and the part that SMEs play in UK economy .................................................... 33 How Do Marketing Laws Affect The Small Business? ........................... 38 Is the Government Doing Enough to Help Businesses and What Effect is this having on UK PLC?....................................................................... 42 The Enforcement of Marketing Law and the Cost to UK PLC – The CTPS........................................................................................................... 52 The Importance of Lobbying ................................................................ 61 Conclusion.......................................................................................... 66 APPENDIX........................................................................................... 70 1. Biographies and Interview Transcripts ....................................... 70 2. Glossary ...................................................................................123 3. The CAP Code – Legislation listed by CAP..................................126 4. Websites of regulatory bodies ....................................................131 5. European Communities (Deregulation) Bill Proposed By Sir Paul Judge March 2003.132 6. Regulatory Impact Assessment – Home Office 1997...................137 7. Gerry Brierley ...........................................................................146 8. Intellectual Property Rights .......................................................146



Executive Summary

sk a general marketer about laws relating to marketing and a strange glaze will probably appear on their face. Discuss strategy or creativity and you may be met with significantly more enthusiasm. To date it appears that marketers have

shrugged off marketing laws as a rather un-sexy responsibility that has nothing to do with their profession, but something that belongs in the domain of the lawyer or the responsibility of the newly emerging role of compliance officer. There is no real surprise here, considering that even though 170 marketing laws have been passed in the UK in the past couple of decades, the contents of the marketing curriculum in business schools or the CPD for marketers does not reflect the requirement for the marketer to establish basic knowledge about marketing laws. Marketing law is not well understood by most practitioners. As a result, awareness about marketing laws amongst both marketing professionals, business managers and business owners is very low, with marketers being unaware not only of general marketing laws, but in-depth knowledge relating to such areas as data protection, which should be a daily and routine requirement for any business. As a result, surprisingly, some companies are becoming over compliant, or unsurprisingly, completely non compliant, resulting in loss of revenues and profits from new and

existing customers. The marketing bodies are not good at lobbying and as a result, some laws get passed without proper input from the marketing profession. It is thought, if marketers were to lead in lobbying effectively and ensuring that their voice is heard in a coherent manner, some laws would not exist to the extent they do today. Lack of lobbying will only increase marketing legislation; it may only be when marketing jobs get squeezed that the marketer will sit up and take notice. Marketers may have suffered due to having to

compete with much larger and better groups who lobby against their profession. For example, the advertising industry gets hit very hard and blamed for a lot of things to do with our health. Sometimes these special interest groups do not take into account how people’s lifestyles have changed. These facts are often difficult to put across and substantiate effectively. Government and the tabloids like to create a headline piece of legislation and the advertising industry is the first to be blamed. We should remember that the creative industry is extensive in the UK and contributes significantly to UK PLC and if it gets hit hard, we all suffer. Lobbying was seen to be very important by many of the respondents; however, seeing the marketer lobbying is a very rare sight indeed. Therefore we end up with laws that are fundamentally flawed. Implementation of marketing laws is also a problem especially when there are revisions to the legislation either because of lobbying groups or because the law has not been that clear in the first place, companies then face huge costs in meeting their obligations of compliance. A number of ill thought out laws get passed, some of which have a material adverse

effect on business. With the emergence of new laws and the revision of existing laws, businesses have to be significantly more knowledgeable in the subject of marketing laws just in order to execute a simple marketing campaign. Larger companies often manage campaigns better in terms of legal content, just because their size and budgets can afford them better knowledge. Large companies also tend to ensure that they can stay within the boundaries of the law due to in-house expertise. However the majority of companies (around 99%) who do not have a legal department, will need to outsource this advice and expertise often at a huge cost to their business. Alternatively, they will

have to rely upon industry institutions to assist in this area or they will need to source the information for themselves, which is often disparate and involves a multiple of subjects and sources, which stretch over products and market sectors. The latter is

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especially true for the micro, small and medium sized enterprises. SME’s have the largest challenge in terms of marketing their business and have to deal with a disproportionate amount of red tape. These businesses cannot afford a whole chain of

marketing suppliers to assist them in ensuring the legal accuracy of their marketing activities, neither will most of these businesses employ a specialist lawyer to assist. The SME will most likely, either browse Government websites, or go to seminars, ask other small business owners of their experience or simply just take the risk and act out of ignorance. Many marketing laws such as the Corporate Telephone Preference Service (CTPS) have not been well publicised and have not only caught out SME’s but have also caught out very experienced telemarketing companies at the time when the CTPS came into force. SME’s play a central role in the European economy. They are a major source

of entrepreneurial skills, innovation and employment. In the European Union of 25 countries, some 23 million SMEs provide around 75 million jobs and represent 99% of all enterprises. These enterprises in the UK employ an estimated 22.7 million people, and had an estimated combined annual turnover of £2,800 billion. SME’s together account for 99.9% of all enterprises. Companies need access to the right information in a timely fashion. As a marketer researching this subject area for this paper, I found information on the subject of marketing laws to be extremely difficult to obtain and certainly information is not being fed down in a coherent or timely manner from

Government. Although, some still remain adamant that ignorance of marketing law is no defence! In order to comply with marketing laws, most businesses and marketers will have been forced to change their marketing methods to a certain degree and in some cases at huge expense to their businesses. The degree of these changes will only continue to move out of the marketer’s favour and in to the favour of the consumer. The greatest concern of

which is the CTPS, which, if the rate of opt–ins continue, it will mean the demise of business-to-business communication, as we know it. This will stifle innovation, product development and sales for UK PLC. With fewer than 50% of SME’s being aware of the CTPS and around 71% of SME’s using the phone as a tool to gain business, this is surely to be the slowest and most painful demise of one of our low cost and one of the most effective business-to-business marketing tools. Businesses that have opted into the CTPS, Telephone Preference Service (TPS) and Fax Preference Service (FPS) have shot themselves in the foot, companies will always need to buy goods and services from

each other and renegotiate with new suppliers. Businesses do not seem to be thinking about the medium and long-term repercussions of their actions by restricting communications. At the rate of CTPS registrations, it will only be a matter of a few years before businesses will not be able to speak with one another! We wonder how industry is expected to survive, let alone thrive if we continue to allow the strangulation of the essential communication channels. It is believed that the CTPS is fundamentally flawed and is a bureaucratic fantasy that should never have left the notepad. Many believe that businesses should be able to contact businesses about business matters.

The bottom line is that businesses need to talk to make money; they need to talk because they need to learn from one another, and they need to talk because they create networks. If those three things are not happening it will be having a major impact on businesses and the UK economy. The UK’s approach to implementing EU Directives compounds the problem by Gold Plating these Directives making it more difficult to UK businesses than its European competitors. As usual, Government may have been heavy handed in applying marketing laws to the majority, when only the minority presents a problem. Marketing is an industry that is acutely conscious of its potential to create controversy, even hostility or resentment amongst both businesses and consumers. Consequently, it strives to avoid confrontation with Government and Regulators wherever possible. This is why a culture of self–regulation and policing has been enthusiastically adopted in the past. The industry has been eager to keep its own house in order. Realistically, the Government would not be able to fund regulatory methods that industry can fund and therefore co-

regulation is the preferred option for Government. This involves Government working



with industry bodies. For example, Ofcom who awarded the contract to the DMA to monitor, which is funded by the DMA subscribers, governs the regulation of the TPS and CTPS. The CTPS, is a good example of co-regulation, but is also a good example

where even the industry co-regulator believes that the CTPS is a disproportionate law and the DMA is now lobbying for reform of the CTPS law. Government is responsible for feeding the information down the line in a coherent manner to businesses and institutions alike. Maybe the Government could take some consultation from the marketing profession on how to communicate more effectively. The current guidelines require that guidance should be issued a minimum of 12 weeks before A Regulation comes into force but over the past 2 years this target has been met for less than half of all new Regulations. So how are marketers and business owners supposed to get their

house in order in such a short period of time? When it comes to writing marketing laws then Government will only get it right when there is a full partnership between the legal input, the marketing input, the regulatory input and the business input. So each part has 25% of ownership. The response from one parliamentarian interviewee was that, it might be time for the Data Protection Act and the CTPS to go through post legislative scrutiny to establish if it is impeding legitimate exchanges of communications between businesses. It seems contradictory that on the one hand the present Government is trumpeting the need for even greater competitiveness in the UK, whilst on the other

making it harder for small companies to market themselves. Generating new business leads is difficult enough in the present climate here in the UK, further restrictions could see many more smaller businesses going under. Initially the CTPS was brought in to protect the SME, but has been proven to be a disproportionate law, with mainly larger businesses now taking advantage of registering with the CTPS. Research shows that SME’s cite regulations as their single largest obstacle to success in their business and a huge drain on their resources. According to estimates, it would be feasible to reduce

administrative costs by as much as 25% by 2012. This would have a significant economic impact on EU economy, resulting in an increase in the level of GDP of about 1.5% or around 150 billion Euro. Research shows that 90% of businesses thought regulations were a tremendous burden and 30% of MP’s thought likewise. So there is a huge difference between what businesses think and what MP’s think. Maybe there is both a need for businesses to better understand how Government operate and a need for Government to better understand the needs of businesses.

It is thought that the full ramifications of the Data Protection Act are probably not even well understood by the people that passed the Act, never mind the general public or marketers. In regard to the CTPS it may be considered that it is an approach to the outlawing of technology, which is in danger of fossilising business communications. If we say, the only way you can communicate is by writing a business a letter, when in fact you could email or phone them, then this is potentially a restriction on using technology to communicate. The CTPS may be an example of a piece of legislation that is simply not working. Some believe that BERR is hurting the small micro business, and

that this piece of legislation is not proportionate to the damage that it is doing to these businesses. Currently, the CTPS is the only one of its kind in Europe. The impact has been that this law prevents businesses from trading freely. It is clear that marketing laws, in particular the CTPS do not meet The Better Regulation Executive’s aims, which are to be transparent, accountable, proportionate, consistent and targeted. On the contrary, the reality from Government research shows that there is low awareness and poor quality of Government guidance, problems with the volume and complexity of regulation along with uncertainty, risk and lack of confidence in Government regulations.

It is believed that Data Protection laws are rarely enforced. Conversely others such as those relating to financial or advertising laws are heavily enforced and carry huge fines. This provides a greater deterrent. The number of laws and the complexity of the laws make it difficult for businesses to comply. The laws have certainly not been framed with the SME in mind and need to be more realistic. Areas such as law on digital

communication do not run across borders and therefore it is difficult to ensure general



compliance. It is odd that we allow the rogue 5% to govern the other 95% of good marketing citizens. Although The Information Commissioner has been given more powers in recent times since the Government lost huge numbers of data records,

realistically it is physically impossible for The Information Commissioner to fully enforce the Data Protection laws. The marketing profession needs to change its attitude to marketing laws. Marketers need to lobby against marketing laws, particularly laws such as the CTPS. However, it does not seem to work when there are too many bodies or individuals lobbying. However, the ASA lobbies strongly in areas such as children’s advertising and the DMA lobbies strongly in the area of data protection. We are a law-abiding nation and accept

law and can lobby to change the law. Because of the whipping system, MP’s tend vote as they are told, they go through standing committees, which is like a mini house of commons, which they put together for each bill. Scrutiny is minimal. Parliament does not deal with the detail on legislation and when people are lobbying, they need to lobby the Government Departments not the MP’s. Generally, trade associations in the UK are not good at lobbying and they are weak at lobbying at the European level. Lobbying in Brussels is the key and trade associations in the UK are much weaker than in Europe. We as marketing people tend not to lobby well in Europe. So maybe it is time that the

marketers took control of their future so as to leave a better legacy for their profession.



Introduction The Mais Bursary was awarded in 2006 for the completion of a research paper into marketing laws and the small and medium sized enterprises (SMEs). At the time of applying for the Mais Bursary there was no course available on the subject of marketing laws. Therefore I proposed creating research on the subject area. The main objective was to deliver a coherent current and future vision of the way that marketing law will affect companies within their marketing initiatives and activities, in particular the SME business community. Further objectives were to consider how

smaller businesses can overcome these marketing laws and use alternative methods to gain competitive advantage and market share and what ultimate impact this has had on new and traditional marketing methods and the economy. Although these areas were covered, it soon became apparent that there were some areas of marketing law, such as the CTPS, which deserved greater in depth research. Both a qualitative and quantitative methodology has been used to establish what current and future legislative laws exist in the UK and what effect this is having on the

small business community now and in the future. Extensive primary data has been gathered in the form of depth interviews with senior members of the marketing and business community. Substantial secondary data was collected in the form of Government and commercial information freely available, although difficult to find in the public domain. The results will be used both in an academic context and in providing assistance for businesses, such as the small business, to overcome the difficulties relating to this complex area. It is hoped that the results of this paper will be seen by Government as an opportunity to better understand the impact of marketing laws on businesses and the economy. Twelve, in depth interviews were conducted and unfortunately some interview requests were declined.

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Marketing law, the marketers and the lawyers – who should take responsibility?

owadays, only a few larger companies can afford the luxury of a legal department and a marketing department, even so, when this is the case, it can cause a degree of difficulty in determining who has overall control and responsibility and

the law and guidelines are of course, open to interpretation. As a result, some companies are becoming over compliant, resulting in loss of revenues from new customers and loss in profits from existing customers. Databases are being mismanaged and confused as to which customers have opted in or opted out of certain calls or emails and the whole management of this function is becoming a costly exercise

to put in place and manage correctly. With laws changing continuously, and with confusion around these laws, businesses have to be significantly more knowledgeable in the subject of marketing law, just to execute a simple campaign. Rosemary Smith, Chair of the DMA (Direct Marketing Association) and Managing Director of OPT-4 says:

“Corporate Governance is the responsibility of each and every employee. If a company is large and lucky enough to have a legal department then advice can be taken from that resource, however, small businesses often do not have a legal or marketing department

and generally their main legal advisors are not likely to be experts in specific areas of marketing law, so smaller businesses need to be more responsible and knowledgeable in this area. Larger businesses can rely on in-house legal teams and capitalise on membership of large trade associations.” “On a day-to-day basis, the marketing person should be responsible for content and data relating to the running of a campaign. Marketing people, often unwillingly, have to accept

responsibility, especially when their legal department may be limited in size or simply not exist. The law as it stands in terms of data protection and direct marketing is principle based and therefore to a large extent it is open to interpretation.” The majority of companies (around 99%) who do not have a legal department, will need to outsource this advice and expertise, at a huge cost to their business, or they will have to rely upon industry institutions to assist in this area, or they will need to source the information for themselves, which is often disparate and involves a multiple of

subjects which stretch over products and sectors. The latter is especially true for the micro, small and medium sized enterprises, as they have the largest challenge in terms of marketing their business and having to deal with a disproportionate amount of red tape. Most of these businesses will belong to the Federation of Small Businesses and to the Forum of Private Business, neither of which have a policy, information or guidelines on

the subject of marketing law! One would think that when fighting for the interests of small business, the issue of being able to freely market a businesses goods and services should be absolutely paramount. So, is marketing law in the domain of the lawyers or the marketers? By choice it appears that the lawyers are seeing this area as an opportunity to make money and the marketers see it as a restriction placed upon their job and certainly are shirking their marketing responsibility. Until this happens, it is likely that more legislation will appear in the UK and more opportunities will exist for the Government to Gold Plate the legislation and more opportunities will exist for the

lawyers too. Until marketers take the lead in lobbying effectively and ensuring that their voice is heard in a coherent manner, marketing legislation will become worse. It is only

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when marketing jobs get squeezed that the marketer will sit up and listen. The responsibility for remaining within the law, must reside within the marketing department. Rosemary Smith, Chair of the DMA and Managing Director of OPT-4

comments on a recent project involving marketing law within a larger organisation with cross-departmental responsibility for marketing law.

“Recently in my role as Director of OPT-4 I was called in to a large corporation to deal with an issue relating to the law, whereby the marketing department needed to seek clarity between their need to produce a marketing campaign and the legal department’s concern that the marketing department may be in breach of marketing law. In this instance the legal team were restricting the marketing team in executing a campaign to the point where

the marketing people could not market their company’s offering. The marketing department were convinced that they were operating best practice and needed an expert to advise on this subject. It transpired that the legal department were not aware of the point of best practice and the CAP codes etc, so I was able to advise more accurately on the variety of options available to them such as the opt in and opt out choices and policies along with the detailed codes of practice available.”

Companies providing data and therefore needing to work to specified standards in order

to ensure continued customer support, have their own industry challenges. Richard Payne-Gill Group Marketing Director at LBM Direct Marketing Limited explains:

“A corporate lawyer is the last resort. We always handle from both the marketing managers AND the compliance managers perspective, in fact, we are overly cautious in this area. Once in the past, I had to use a specialist data protection lawyer, as the standard lawyer was not good enough in this subject area. With hindsight now, the advice I received was not worth the cost, and 99% of what we do in terms of compliance, we carry out in house. I think it is rare nowadays for companies to have an in-house legal team, even Dunn and Bradstreet outsource their legal requirements and they have a turnover of £100 million! But I think you need to have a good grip as to the relevance of the law and the business you are in.” Traditionally, marketing has been a self–regulated discipline largely free from the interference of legislation, or so most marketers think. Yet marketing is subject to

common law, i.e. decisions made in courts over the years, as well as statutes enacted by Parliament and EU directives, and the relevant body of case law which stretches back at least 200 years. The somewhat laissez faire attitude stems from the fact that few laws regulate marketing directly, but many more touch on marketing activities in certain areas. From the legislative point of view, the control of marketing has developed haphazardly, and certain areas are far more constrained than others. The law governing marketing activity depends on what product (for example tobacco and medicines), the sectors (such as gaming and finance and even the method of marketing (on – pack, via

SMS, email etc). Apart from legislation concerning products, sectors and methods, laws also exist which govern whether marketing is permissible in the first place. Marketing can be affected by laws relating to contract, food advertising, libel and defamation, negligence, intellectual laws, piracy and copyright and the Trade Description Act 1968. Certain industries are also restricted by professional codes; the Law Society for example, governs how lawyers can market their services.

Over the past few years, legislation has certainly been introduced to curb the excesses of marketers who ignore the guidelines, but much more has stemmed from the need to incorporate EU directives within the body of English law. The Chartered Institute of Marketing Insights Team found, for example, that in 2005, 21 new Acts, Regulations or amendments affecting marketers were passed, with another 10 bills to be put before Parliament in 2006. In all over 70 marketing laws have been passed over the last

decade. Lord Cotter, SME spokesperson for the Liberal Democrats comments:



“In my experience as a small business owner in 1997 this matter did not really arise and the issues surrounding marketing law did not seem too relevant to our business at that time. Also at that time, I was spending 95% of my time working as an MP for Weston-Super-Mare in Parliament. So, I was relatively hands off in the business as there were managers to do the day to day running of the business. I think the subject of marketing law today would have greater issues affecting our business, however the business was sold to employees in 2002 and there have been many changes in this area since then.” As to whether marketing law should be in the domain of the marketer or the lawyer, Lord McNally leader of the Liberal Democrats, House of Lords, comments:

“Marketing should be within the domain of the law of the land. What one tries to do in terms of business is to see where you can have codes of conduct and other such non-logistic ways of bringing order to a sector. In that way, it is far better to have your professional bodies laying down the guidelines than getting it into the hands of the lawyers, because lawyers are invariably add to the expense and to the inflexibility to the way things may go. Although not a direct example, a good comparison is the Press Complaints Commission where they have non statutory, non legal way of settling

disputes and setting guidelines, that probably is the best way in business too, if you can have guidance and professional codes of conduct and the profession is self policing, rather than going down the statutory route as this ends up being too bureaucratic, inflexible and expensive. The great thing is that, if self-regulation does not work, you can always turn to statutory regulation as a final law, but if you start off with statutory regulations and that does not work you’ve got no where to go. In a way, the threat of statutory regulation gives self-regulation a back up and a muscle. The two go together as statutory regulation is used as a big stick if self-regulation doesn’t work. But particularly dealing with business, self-regulation is best, because it is being defined and implemented by people who have the sharp end experience of it.” Some of the proposed legislation is extremely constrictive.

Clive Mishon, Chair of the ISP (Institute of Sales Promotion), also believes that the marketing industry should be self-regulated and says:

“The marketing industry should be self-regulatory. Primarily its marketing law has been governed by legislation from Brussels and Westminster. We (as marketers) should be running this. Lawyers should only come into it when we are discussing the law of the land. The principal operators on a day-to-day basis should be the marketers, the lawyers need to check, but the marketers should construct. The lawyers should be responsible for

law and be answerable to EU and UK parliament.

As to the question of whose responsibility marketing law should be, Danny Lopez CEO of UKTI (UK Trade and Investment) believes that the responsibility of ownership needs to be shared between the marketer and the lawyer. He says:

“I think it has to be shared, because if you think about the rise of the senior marketer within organisations. The marketers never used to achieve board status, which was a big mistake and meant ultimately that companies were not taking marketing seriously and not even understanding what strategic marketing meant and didn’t understand how to segment audiences or understand audiences etc and it is only when the marketer became a board member that this got taken seriously within the company. So, if you use that as an example, at the end of the day, I don’t think you can get away from the fact that the lawyer has to be the one who has to be able to articulate and implement, but actually needs full input from the marketer, so to me it has to be joint ownership of that is possible

in practice.”



Ed Weatherall, Chair of the business to business area of the IDM (Institute of Direct Marketing), believes that changes in the law need to made by a lawyer, but that it needs

to be in marketing speak and language, so that all marketers and business owners can understand the implications to their business. Ed comments:

“I think any change in the laws needs to be made by a lawyer but it needs to be in marketing speak and language for the marketer and layperson to understand. At the moment the law is not black and white so it ends up being more of a policy within organisations and therefore sometimes marketing people tend to ignore the requirements. Lawyers need to translate the law into layman’s terms. Any charges brought against a

company should be down to the lawyers to fight on the behalf of the marketer or organisation. However, if it is simply an issue relating to data protection then a marketing person should be able to deal with this perfectly well as marketing people should be aware of best practice and involved.” When asked if these laws are stifling industry, Ed goes on to explain:

“Laws are changed for a reason, however, the Government should consult and industry in

my opinion has not been effectively consulted on some of these issues. Otherwise, what is the point in creating these laws without the correct information? Trade bodies are there to talk and proactively work with industry. Government should consult with experts who specialise in specific areas to get the best level of consultation.” Kolah writes in 2002 that:

“Knowing your legal obligations as well as your rights as a marketer is fundamental. No other profession – doctors, lawyers, architects, engineers, surveyors, teachers – is so poorly served in understanding the legal ramifications of its work in an easy and accessible way. Why should we, as professional marketers, be any different from any of these other professions? Ignorance of the law is a very dangerous state of affairs as it can lead to an expensive lawsuit, a cancelled marketing campaign and damage to reputation. It is important that marketers refresh and update their understanding of the law, as changes in the law affect marketing best practice in many different ways. Obtaining,

holding, using and sharing information about customers and prospects is an essential element of the marketing mix. However, from a public policy perspective, the rights and freedoms of individuals in society must be protected from unwanted interest and intrusion, including that from marketers! Balanced against this is the freedom for the marketers to go about their business communicating with existing customers and prospecting for new customers.”1 The CIM commented in January 2006 that, no marketer is an island, marketing and

ignorance of the Law is no defence…so burying your head in the sand is not an option. Viewed a certain way it seems as though the practice of marketing is under attack from legislators. A recent MORI poll carried out for The Chartered Institute of Marketing reveals that 61% of marketers surveyed felt legal regulations had had a negative impact on their business. They also think worse is yet to come, with 94% expecting even more legislation with a marketing impact to be introduced over the next five years. The good old days of laissez-faire marketing would appear to have gone forever. Like it or not, marketing is now a highly regulated part of business life. The question is not so much “What can we do about it?” as “How do we live with it?” Non-compliance with the Law - or with the multitude of rules and regulations in force - can be a serious business both for you personally and for your organisation. Entire campaigns may be junked, share prices may drop billions, you might even find yourself behind bars. Ignorance of the Law is no defence, so burying your head in the sand isn’t a realistic option either.

1 Kolah. A. Essential Law for Marketers, p2,135, 2002



Another survey carried out for the Institute in 2005 revealed that 87% of marketers believed it was their own responsibility to keep abreast of legal changes. We no longer

think that’s possible - the average marketer is far too busy in their full-time job to contemplate becoming a part-time law student. In this paper therefore we propose the creation of a new role within organisations, that of the Marketing Compliance Officer. It’s an issue many organisations will have to confront sooner rather than later2.

David Thorpe at CIM Insights continues:

“Marketers are facing a climate of increasingly restrictive legislation. Heavy-handed Bills

are regularly placed before Governments in the UK, the US and further afield. Marketers face confusion over the number of laws, regulations and codes that they have to be knowledgeable about. And increasingly, marketers even need to know about laws that have been passed elsewhere in the world. But such skills are not necessarily a marketer’s forte. How can the marketing community respond to this ever more complex legal environment in order to continue to do its job responsibly and effectively? In the past, self-regulation has been the basis for marketing’s relationship with Governments. But this self-regulatory framework is being overwritten with legislation. Companies

themselves need to take a more proactive role in order to assist and reinforce self -regulation, to avoid brand damage at best and costly legal proceedings at worst. In fact, the raised bar of marketing legislation allows a real opportunity to present marketing in a positive light - as a mature, responsible discipline. By recognising the role of Marketing Compliance Officer, companies can show that they are willing to identify and comply with their legal responsibilities, and communicate their actions to the wider business community, Governments and self-regulatory bodies.” Marketing and 3 In the UK, there is a climate of self-regulation that has served the marketing community and the public well. But this culture of self-regulation is being gradually and irretrievably diminished. The recent Olympic Bill is an example of how extreme and constrictive legislation is becoming. The new bill makes it illegal to combine words like ‘games’, ‘medals’, ‘gold’, ‘2012’, ‘sponsor’ or ‘summer’ in any form of advertising. The bill is designed to stop businesses ‘cashing in’ on the Olympics, despite a London 2012 spokesperson’s statement that

“..there is absolutely no intention of stopping London businesses from becoming involved in the Games.” However, as Marina Palomba, Legal Director at the IPA says:

“You won’t even be able to say, ‘Come to London in 2012’ because it will infringe the [proposed] Act.” Palomba goes on to add that even witty advertising for suntan lotion saying something like “Get bronze in London in 2012” would break the law. [Source: ibid.] Understandably, the London 2012 committee wants to clamp down on ‘ambush marketing’. This is where companies who have not paid to be the official sponsors of an event associate their products with players or grounds, or where they advertise nearby, in order to imply to consumers that the event they have ‘ambushed’ endorses their product. But the ferocity of the provisions of the Bill, and the Government’s apparently willing complicity with its contents, should set alarm bells ringing amongst the huge majority of responsible marketers, who are being punished because of a minority who flout reasonable rules and regulations. 4 Marketing and

2 CIM Insights, issue 9, January 2006, Thorpe.D.



What Level of Awareness do Marketers have about Marketing Laws and in Particular, the CTPS? Rosemary Smith, Chair of the DMA, describes the level of awareness amongst marketers as patchy and goes on to say:

“There is no real correlation to the size of the business and knowledge. I have met some small businesses who are very aware and well governed and some larger businesses that are not so well governed but have large legal departments, or who have the funds to outsource the advice. Generally larger companies have more legal support. It is really the marketing law in practice that matters! The key thing is their control of the issues, you only need one maverick in a team to wreck things for you by doing something like emailing a list without checking that permission has been granted, so it’s about managing

the law in practice.” Sir Paul Judge, President of the CIM and Past Master of the Worshipful Company of Marketors, believes the lack of awareness of marketing law is related to the exclusion of marketing laws in our classic education. He says:

“The classic business education courses have not historically included marketing law, as law and business have often been separate in this respect. I think that it is vital that the

marketing profession and businesses have a good understanding of the basics.” Sally Muggeridge, CEO of the IPT, believes that awareness is linked to the size of business in terms of the resource available to the smaller business in comparison to the larger business and the limited time that the SME has in their day to day calendar to focus on marketing laws, She comments:

“The average SME will, in the main, be unaware of most of these laws as they are generally just managing to keep their heads above water and balancing their books. At the IPT, we run training programmes and bring businesses into the House of Commons so that they can get a better understanding of how things work and to bring them more awareness on these matters. Conversely, we also bring MP’s into businesses, so they can have a greater appreciation of the challenges that SMEs face. SMEs just really do not have the time or resource to always comply accurately. An example to illustrate this is that the head of consumer banking at HSBC told me that 80% of their time is spent on

how to comply with European Legislation and making sure they know what legislation is coming along. If you wanted to set up a small financial company, it would be very difficult for an SME to manage the need for compliance, as they just would not have the resource to deal with these issues.” Clive Mishon, Chair of the ISP agrees that awareness of marketing laws amongst marketers is very low and with the findings of the CIM marketing trends survey 2008,

where awareness on the subject of marketing law was reported as very low. He says:

“I agree, there is a very low level of marketing awareness on the subject and limited understanding of marketing law generally. Large companies tend to ensure that they can stay within the boundaries of the law due to in-house expertise. I agree with the findings of the survey and that is why I think there should be more education courses to address this issue.”



He also raises an important point about awareness in parallel disciplines and suggests a way forward:

“Get as many marketers and businesses as possible to work together to promote best practice in marketing compliance. I would like to stress that the greatest amount of ignorance in this area is from those who are working in parallel disciplines where they do not recognise that they are ‘straying’ into other marketing disciplines. For example if you look at the premium phone line issues whereby broadcasters have run a promotion on air, they did not look at promotional law properly and did not taken any of this into account before running their campaigns. The whole area of compliance is low and ignorance is no defence and they need to understand what relationship promotional law has with other

areas of law.” Lord McNally, Leader Liberal Democrats, House of Lords, thinks that a guide in layman’s terms would help the marketing industry and small businesses be more aware of marketing laws and be a low cost option for them. He says:

“My view is that one of the trade bodies or collectively they should produce in layman’s terms a guide as a service to their members. I am quite sure a handbook would fulfil the

need. Law firms do the same with finance bills, it’s a big re-write but I am surprised that such a thing does not exist as it is needed and once the you have got the bible for industry, it only needs to be revised every couple of years.” Edward Fulbrook, Marketing Director at Link Direct, disagrees. He says:

“I think there is general common sense around the laws in marketing. If the marketer has a query then they can refer this to a lawyer or their trade body such as the DMA, ISP etc. There is normally a whole supply chain involved in marketing implementation therefore often you will have a designer, printer, marketing agency etc and therefore often around four people are involved within the process in my industry so there is a very good understanding of what we can and cannot do. We know our own areas and knowledge is good in our sector and supply chain. If we need to, as we are members of the DMA and ISP, we can refer to their legal services department or go to an industry specialist.”

For the small business, however, this is often not the case as they cannot afford a whole chain of marketing suppliers to assist them in the process of the accuracy of their marketing activities in terms of legalities, neither will most of them employ a specialist lawyer to assist. The SME will, most likely, either browse Government websites, or go to seminars, ask other small business owners of their experience or simply just take the risk and act out of ignorance. When the question of availability of training courses arose, Ed Weatherall, Chair of the

IDM B2B said:

“There are a few courses about but they are more for the practitioner and very expensive. So for the small business, to spend large amounts and spend a whole day out of the office can be very costly to their business. Trade bodies try hard to help, but small businesses have to pay to be a member and they may think that their funds may be better spend on their marketing activities such as a new website. Government sites are directed more to the legal profession so small businesses and marketers do not really know where to go and there are so many grey areas. The Direct Marketing Association offer good advice, but again it is costly to become a member for a small business.” Ed also goes on to comment about the reliance of businesses and marketers on direct marketing companies such as his own and says:



“I think there is a certain reliance on suppliers to provide expertise nowadays. Marketers and businesses tend to rely on suppliers such as marketing agencies for best practice, this could bite them further down the line as often contracts with agencies state that the responsibility lies with the client. Sometimes businesses buy data lists and assume they are clean and do not ask questions such as where did the data come from and has it got the correct opt in requirements, which is the responsibility of the business to ask the right questions about the data lists.” Mardev report that, awareness of the Corporate Telephone Preference Service (CTPS), introduced to protect small business from unwanted calls, is modest at 49% among small businesses (the very group it was intended to protect).

Just over half the respondents in a survey recently conducted by Mardev were not aware of its existence. We polled a random sample of small companies to see how they felt about CTPS, in regard to the protection it affords them as well as how they feel about larger companies registering telephone numbers as well to prevent unsolicited marketing calls from other companies.

Although awareness of CTPS was fairly low, 71% of the respondents depended on the phone to generate new business, so one can be fairly sure that prospect lists are not being screened against CTPS systematically across all companies. But for small business every new piece of legislation represents another overhead, as one respondent pointed out when highlighting that compliance comes at a price and

with greater issues for smaller companies than larger ones. There is a certain amount of circumstantial evidence to suggest that larger companies are choosing to register the telephone numbers of decision makers with CTPS, and route suppliers through purchasing departments. Mardev asked small businesses how they felt about going this route in their telemarketing and telesales campaigns. The response was overwhelmingly negative. Small business people want unfettered access to decision makers, and see the barrier

that CTPS can create as being restrictive of their ability to sell. We were inundated with comments that illustrate this issue, such as:

• 'this is useless, we need to speak to the decision maker’

• 'makes things difficult – sometimes only the decision makers appreciate my work'

• ‘Not good! Effective selling is based on building strong relationships’

• 'we absolutely need to build relationships with the decision makers' Small businesses see the operation of CTPS as unfair. This was summed up by one respondent who said:

'in simple terms this legislation operates greatly in favour of incumbent supply organisations, virtually eliminating new entrants to market.'

Business to business selling is clearly all about the value that one organisation can bring to another. Business decisions are made on calculations or beliefs that there will be an ROI as a consequence. Decisions are not made in the same way that consumers may choose to buy or switch. Therefore the application of rules in a similar way to consumers and businesses is questionable.



One respondent put it succinctly: 'the company (meaning one which has registered phone numbers with CTPS) itself could be missing out on important business

opportunities.’ This research has been further substantiated by one of my research interviews, Phil Orford from the Forum of Private Business, commented that initially they had screened my call to them, however, once fully aware of the issues that I was raising, they realised that it was important that they had better awareness on the issues of marketing law and in particular the CTPS, in order that they could make a valued judgment on the importance of lobbying on this matter.

Although awareness of some marketing laws appears low, registrations at the initial launch of the CTPS were quite high as the Daily Telegraph reported in 2004.Within two months of the CTPS being launched the Telegraph reported that 57,000 businesses had registered for the service. Tessa Kelly, Director of Compliance at the DMA said the daily average is running at around 1,000 numbers. The new protection scheme caused controversy, not least because of the cost of finding out whether a company has registered its number. The DMA charges £3,750 per year for access to the complete list,

although it and several other private companies also offer to check a limited volume of numbers for around £50 per month. Tracy Hoather at Same Day plc – a nationwide courier service employing 48 staff, said she had a sales team that regularly called customers to pitch for work when the firm had a vehicle free:

“If they had suddenly registered with the CTPS I would not be aware of it and be liable for a £5,000 fine.” Having a register meant that her sales team would have to waste time looking up numbers every day. Ms Hoather said that she understood why people should want to be able to stop cold calling to their homes. But businesses, she said, were different:

“We must have three of four calls a day from people trying to get business. It’s not something that bothers me.”3

A further complaint has been that the CTPS service was not well publicised, which meant that many marketers, companies and telemarkers were caught out in the early stages. There was limited information, which was not well published and difficult to find. The people who needed to know, knew very little about the service and many came across it by accident, the service was not out there with a proactive marketing campaign, many were worried that they might be fined or sent to jail for non-compliance! Many believe that commerce is set to hang itself with the new length of rope called CTPS and believe that it is insane to consider that a business cannot

contact another. Danny Lopez, CEO of UKTI comments:

“I have not experienced this directly, but one thing I would highlight would be the ignorance of companies in this area. Companies do not know what they should or shouldn’t be doing and that means that they don’t have access to the right information, which means that somebody is not feeding the information down. In many cases, they don’t know who they should be accessing in Government to obtain information and I think it fair to say that they would generally see it more as a hindrance than an opportunity to be able to communicate. This will always be hanging over like a gloomy shadow by thinking that they are going to be constrained by the way they communicate, as opposed to opening up a whole new avenue of communication.”

3 Daily Telegraph 09.08.2004



He goes on to discuss the level of awareness and how this could be made easier for businesses:

“I don’t think that the level of awareness is high in fairness, I think it goes back as what can be seen sometimes as a rather confusing delivery on behalf of whether it is the regulatory side of things or any other public sector delivery channel. I think more of an effort needs to be done to promote it effectively. Just like we are talking about effective marketing, then the delivery of services should be exactly the same.”

What do you think that could look like?

“Simplicity of message, clarity, and ease, does it have a tangible form? Yes it would be a user friendly website some kind of campaign to ensure it gets through in the right way. This could involve direct mail, seminars and workshops, may be something that could be done through the regional development agencies, who would be able to drum up very quickly a number of institutions and organisations which could be put together very quickly within their regions and that to me, would be a sensible way of doing it.” Business-to-Business marketing reported in 2004 that, there are a lot of half-truths

and rumours flying about. The level of awareness is poor on all fronts and is exacerbated by the CTPS’s policy of allowing third parties to license its data then resell it to telemarketers on a commercial basis. Some companies have sought to stimulate business by propagating myths regarding the circumstances in which the Information Commissioner will issue fines. Whether registrations continue to increase or whether organisations realise that

actually it is in their interests to receive telemarketing calls and decline the opportunity to renew their opt-out after a year will be the critical factors. The worst fears may have gone unrealised as yet, but if registrations continue to rise exponentially as news of the service spreads by word-of-mouth and other mediums, the CTPS could still have catastrophic repercussions for B2B telemarketers and any business wishing to make a legitimate sales call. In 2006 Business 2 Business marketing reported that a significant proportion of B2B

marketers remain ignorant of the issues and implications of the CTPS two years after its implementation according to research by B2B marketing and The Telemarketing Company. 40% of respondents stated that they were not confident their telemarketing activity was conducted within the requirements of the CTPS. Over 20% of B2B telemarketers described their understanding of the actions required for CTPS compliance as ‘poor’, whilst an overwhelming 82% believe the campaign designed to drive awareness of the CTPS and its implications has not been effective. Over 70% believe that more should be done to realise awareness of the CTPS. These figures are

unchanged from a previous survey that B2B marketing conducted on the CTPS in October 2004. It would appear that although there are significant potential negative repercussions as a result of the CTPS, only a minority of telemarketers have experienced this to date. As the list of opted – out numbers grows over time, the level of threat may change. In terms of overall attitudes to CTPS, over a quarter of respondents regard it as bad for marketing. This has been at the expense of those who supported it in principle, which suggests a gradual erosion of support may be taking place. Almost 80% of B2B marketers use telemarketing on a regular basis. 50% of respondents allocated fewer than 10 percent of their budget to telemarketing, with just over 50% typically seeing a response rate of over 5%. 12% say average response rates are over 20%. Internal telemarketing is significantly more popular than using agencies – 51% versus 18% respectively. 74% had the objective of lead generation. Only a minority of respondents used telemarketing with research as an objective. Almost every company in the world uses the phone as a sales channel!



The CIM reported that, awareness in 2006 was low, with some 48% of marketers are unaware of the International Financial Reporting Standards 2005. And 44% of marketers are unaware of the Privacy Requirements.

Marketers are well aware of the legislation time bomb that they are facing. Some 94% of marketers believe that in the next five years, the industry will face more legal Regulation4, yet despite a separate survey which recently showed that 87% of marketing Professional respondents feel it is up to individual marketers to be aware of legal constraints around marketing5, there is a great deal of doubt on the part of marketers about how existing laws affect them. For example, some 48% of marketers are unaware of the International Financial Reporting Standards 2005. And 44% of marketers are

unaware of the Privacy Electronic Communications Regulations (PECR) - which requires, amongst other things, that companies provide ‘opt-in’ boxes for unsolicited electronic mail, rather than the ‘opt-out’ boxes, which are still prevalent6. PECR does not cover direct postal mail. But many marketers are unaware that unsolicited direct mail communications are required to offer the option for customers to decline further unsolicited communications. Many otherwise reputable companies do not provide such an option on their direct mail communications. The blame for this lies squarely with the marketing department - as does the presence of ‘opt-out’ instead of ‘opt-in’ boxes in

electronic communications. The story is worryingly similar with other laws affecting marketers. A recent survey by Mortgages Plc (May 2005) showed that one in four advertisements for private home mortgages were not compliant with FSA (Financial Services Authority) regulations that have been in place since 31 August 20047.

4 Source: Legal Implications and their Impact, MORI/CIM, 2005

5 Source: Special Report for The Chartered Institute of Marketing, Croner Reward, 2005

6 Source: Legal Implications and their Impact, MORI/CIM, 2005

7 CIM Insights, issue 9, January 2006, Thorpe.D and LawLabs.



Given the current marketing laws, in particular, the CTPS, how are businesses managing to effectively communicate their offering? Rosemary Smith, Chair of the DMA believes that companies have changed their communication methods because of marketing laws; she says:

“Yes, absolutely. Companies have changed their direct marketing habits. Permission statements or opt outs are much more common now. The Data Protection regulations have been around for 21 years now. However permission statements are used less in B2B than B2C. I have a theory about each new channel, which is that the first new people to go to a new channel are often the outlaws; for example, time share operators in the

1980’s moved from newspapers to direct mail then the clean up happened to prevent supply of data and self regulation closed in on them. Email of course is much lower cost and the spray and pray of untargeted spam abused the channel, and then the PECR regulations came in, which made it illegal to do this kind of thing, which was deigned to separate the legitimate from the illegitimate. But deliverability of emails worsened as people started putting up barriers to receive the emails and therefore open rates and click through rates started declining. This has a correlation with the volume sent. The marketing mix has become more sophisticated, for example financial and direct mail

works well on paper, as people trust receiving detailed financial information on paper. There is also a generational issue here, whereby younger people are more open to electronic communications.” Phil Orford, CEO of FPB, thinks that freedom of communication is very important between business to business communications, but he also believes that businesses could communicate better. He comments:

“The issue here is about reputable businesses as opposed to non-reputable businesses. There are certain businesses that set up and simply exist just to send spam mail to businesses and people, this just damages the reputable business. I think that businesses should be able to communicate freely, but should not be inundated with sales calls and emails to such an extent that it becomes a nuisance. Freedom of communication should be allowed. There should, however, be restrictions in areas such as cost and environmental issues and they should be allowed the opportunity to opt out or unsubscribe, which is

sometimes impossible and the only way to screen these out to a degree is by good spam filtering systems. Industry could really do itself some favours here by communicating better. It is really the minority that causes the problem for the majority. It is vital that businesses can communicate more freely and it is about managing the process.” Sally Muggeridge, CEO of the IPT believes that businesses have been forced to change their marketing communication methods:

“I think that they have been forced to change in many ways. For example, take the small businesses like the corner shop or small manufacturer run by an engineer – these owners are less likely to know about marketing communication and the laws that exist around them. They may know about how to get someone to write good copy for them, but may not think to get the copy or offer they want to communicate checked for legal compliance, which can leave them exposed. Legislation for cigarette and tobacco companies in terms of labelling and advertising is extremely onerous, because of the labelling laws and laws

around smoking, they have no space to put any communication about their organisation – all they can put is negative communication about smoking and soon they will have to put



pictures about lungs covered in nicotine. How many companies would accept such a negative form of communication about their product? Companies in this market have some of the most detailed and best CSR policies that I have come across in industry.” Lord McNally, Leader of the Liberal Democrats, House of Lords comments that:

“Although I am not an expert on data protection, I have to say that when you try to do something reasonable yourself, it comes as a shock that you can’t have the information you need or can’t do a certain thing because of the Data Protection Act. I do wonder whether the act is sometimes over interpreted and I think that this goes back to the problem of statutory rather than self-regulation. In that people tend to play safe with

statutory regulation and are not willing to apply common sense judgements and seem to stick to what seems to be the letter of the law.” Edward Fulbrook, Marketing Director of LinkDirect Limited direct mail company comments that there has been no real change for their company:

“To a large extent, it has not been affected, there are no significant changes in numbers and our business is not particularly affected by The Telephone Preference Service, and we

subscribe to the DMA’s rules and regulations. Clients have adjusted to fit in and we have not seen a particular downturn, in fact our business is growing. The most fundamental change we have noticed has been to do with green issues rather than marketing law in areas such as reducing wastage. This means we are using targeting and profiling, rather than a blanket approach.” “Our customers are generally aware of marketing law and if they have never used a direct mailing company before, then we advise them and send information relative to their requirements. Most of our business is generated and communicated by email or phone. We advise our client on the design of their campaign in terms of the best methods to use and ensure that they are aware of marketing laws surrounding this. I think that The Fax Preference Service is a good thing. On the issue of direct mail, when the Data Preference Service came into operation people assumed that it would only filter out “junkmail”. What they did not realise was that any mail which was not addressed to a named individual would not be received. This included what some households considered essential items

such as information from their local council and their phone book! Therefore, many people decided not to subscribe to this service. You have to think about the figures relating to direct mail and door to door distribution and put it in perspective, 74% of the adult population in the UK buy at least once per year from direct mail and door to door. This medium is an increasing phenomenon not a decreasing one. For example, I needed some new blinds and received a leaflet recently through the door giving me substantial discounts over and above what I would have got visiting a shop and so I purchased through direct mail.” When talking about their ability to acquire new businesses he goes on to say:

“There is no change really, there are the same resources and sources, the only fall off in business we have had is from estate agents because of the current situation in the housing market. Normally we find that direct mail and door-to-door increases because of budget cuts within organisations. This because advertisers look to reach their customers in a more targeted way, to reduce wastage. This often means a reduction in the use of press, TV, cinema and radio advertising budgets, as they are now very fragmented. We also now have extremely good tools for socio economic profiling such as MOSAIC amongst others. However, I think that email and SMS marketing may cause the bigger problems for direct mail and door to door as it can also be very targeted, however at the present time it seems to be very unregulated. I get so much spam when opening my computer and it is a real problem clearing out my inbox every morning and SMS is now becoming a problem for me also with 3-5 unsolicited texts per week. There seems to be a major problem with

filtering from these third party opt-in databases. In fact, Link Direct purchased some data



for email purposes some time ago and we used a company who provided 65,000 marketing people’s email addresses and we used a very generous offer to entice buyers and we did not even get one reply from using this database, so either the database was totally inaccurate or the recipients spam filters took out the emails. So now we spend time being much more targeted, concentrating on just 500 targets and this produces a totally different response rate. A high proportion of emails we now receive come from, professional people trying to sell their services, we do not receive a lot of B2B e-mails.” Ed Weatherall, Chair of the IDM B2B and Managing Director of Concep, direct email marketing company comments on his experience about current marketing laws:

“There may be fear of embracing new channels and new technologies, or businesses may take on new channels but ignore some of the legal aspects but with just put a toes in to test the water first and carry on with these marketing activities until they get caught. It is quite scary how many people and businesses are not aware of the TPS and FPS so the people who comply loose out so by blocking everyone for the sake of stopping a few bad guys means the good guys suffer.” Ed goes on to say that he does not think that businesses have changed their marketing

communications methods:

“I do not think that they have changed apart from new email and SMS types of channels becoming available. I think they are using more channels more often – more of the marketing mix. Often its cost driven and I notice, that if I put the term marketing law into Google that the law firm Osborne Clark appears first and the CIM is second on the list!” Ed goes on to talk about how Concep has been affected by marketing laws: “We always try to view the law as positive and that it is there for making the industry better, but there is not a joined up effort to comply with the law as many of the emails we send out on behalf of our customers may not reach their recipients and this is noting to do with the laws. For example we get affected by ISP’s blacklisting, there is nothing legal about this it is just a community who have decided on a way to be self regulated and often good and legitimate companies like ours who adhere to the law and best practice

are getting blacklisted. In fact, there is a company called Spamhouse, which is one man based on a barge in London and many ISP’s go to him for blacklists, even the company Accenture appeared on his blacklist. In the United States Spamhouse has been charged with offences relating to this, but the UK law does not protect companies like us from this person who is a self appointed judge and executioner, but the ISP’s seem to listen to him, which is a concern. There is still a lot of stuff coming out of China and Russia, which is not being pursued by the legal channels. We get asked a lot for advice by our clients and although we do assist, we have to advise them to get their own legal counsel, as we are

not lawyers.” Ed goes onto talk about the difficulties that registration on the CTPS affects business communications and how this will affect start up companies:

“Business-to-business companies selling to companies have shot themselves in the foot by opting in to the preference services such at TPS and FPS. Companies will always need to purchase products or services from each other so it does not make sense. There is currently a double opt in requirement for consumers and an opt out requirement for businesses. There can be a problem when businesses are using the slightly more relaxed opt-out law when contacting named business people to sell consumer items.” At our company Concep, when we started up, we could not afford the money to subscribe to the TPS list, so had this been in force at the time, I doubt whether we would have been able to start up the Concep email marketing business, so most likely Concep would not



exist today or the regulations would have been so daunting a task, that we most likely would not have started Concep.” Do you think this is affecting businesses starting up today? “Probably, it is odd that TPS is often perceived as a telesales company requirement but businesses don’t think that every time they pick up the phone to talk with prospects or customers they are doing selling, which means that registering with the TPS can be detrimental to a company as all companies need to promote their goods or services. It comes down to relevance and of course, companies should respect the wish of the person who has opted out.”

How does Concep communicate with its customers? “Concep are quite unique in that we produce and adhere to our own best practice, which goes far beyond what the policies are. We are very diligent in the acquisition of our customers and our policy has been a cultural element embedded in our company from the outset. We believe at Concep that it is all about relationship, rather than simply transactional business. We believe in email marketing as a serious channel and not just a

medium to hit lots of people quickly as this can damage a brand, that’s why we specialise in B2B as it is even more so about relationships not a volume business, hence we do not charge per email.” Richard Payne-Gill, Group Marketing Director and Khurram Akram, Head of Compliance for data provider LBM comment on the marketing laws that affect their business and the impact that it has on their brand and customer perception. Khurram

states:

“One of the issues here is the consumer TPS registration process, once a consumer is added onto the register, they stay on the system as registered permanently – for life! The corporate TPS is different with an annual renewal process.” Richard states that:

“Our percentage of calls to consumer and corporate tend to be around 70% consumer 30% corporate, so the biggest problem we face is with the consumer side of things.” He goes on to say: “The value of MPS is a mystery. Clearly there is an environmental angle but the real problem is with the door drop industry as they are unregulated and non-targeted. They also represent the vast majority of “junk mail”. However, to date Government is not

distinguishing between the Direct Marketing industry and “door droppers”. We are seen by them and the public as one and the same, which is why we support measures designed to stop door dropping. We recommend that our clients mail specific and appropriate propositions to a carefully targeted audience. Indeed, we practice what we preach using our analytical team to identify prospects most likely to respond to our contact, analytical and data services – this lowers our direct mail volumes and increases our marketing ROI.” He goes on to discuss some of the negative press they have received, even though they lead the way in compliance measures:

“The LBM emphasis on compliance is over and above the regulatory requirements, we are confident we lead the way. We have at times had unfair comments made on internet blogs eg. forums on cold calling, where often the information is factually incorrect (eg. telephone numbers are listed that are not ours) or is framed in an emotive or misleading

way. We have to balance the damage to our reputation with the costs associated with



challenging this misinformation. Our current position is to not respond, this is extremely difficult at times when the motivation is very much to “set the record straight” however we have to make an objective business decision based on costs to defend versus perceived damage to our reputation.” Khurram goes on to emphasise how LBM comply, and how competition from offshore companies who are not complying makes their work more difficult:

“Once a number has been registered with TPS it can not be called unless prior consent has been obtained from the customer, but there are companies who disregard TPS rules. For example, there are lots of offshore companies working on behalf of UK based

companies who do not comply with the TPS requirements.” He goes on to compare how various preference services contradict each other: “Our call centre clients are biased towards B2C with a number of large blue chip accounts accounting for the majority of our business, our data business is more B2B orientated and B2B data compliance is slightly different. I don’t think that switchboard numbers should be listed on TPS register, but direct individuals numbers I think this is more of an issue

and the option of TPS is appropriate. There is a problem in that sole traders are treated like consumers so they will be on the register permanently like consumers. We have raised the issue with the DMA and as we think this registration for the life span of a business is wrong. Further, there is a contradiction between the way the MPS register is applied and TPS. The MPS register does not block a whole address, just the individual at an address. Therefore why should TPS block the whole phone number? It seems wrong that the receptionist of a company has the right to block the main switchboard number - there are some major corporate companies in the UK whose head office switchboard phone numbers are on the Corporate TPS register. Our view is TPS should work as MPS works, i.e. at the level of the individual not the corporate entity. There is a balance required between rights to privacy and regulation interfering with efficient markets.” The UK Corporate Telephone Preference Service is a central register of businesses that have chosen not to receive unsolicited sales and marketing phone calls, or cold calls, as they are also known. It is co-regulated by OFCOM and the Direct Marketing

Association, who manage the registration process and database. The Corporate Telephone Preference Service is operated and funded by the direct marketing industry, and regulation is overseen by the Information Commissioners Office. According to the CTPS, corporate subscribers can include, “corporate bodies such as a limited company in the UK, a limited liability partnership in England, Wales and Northern Ireland or any partnership in Scotland.” CTPS is also available to non-profit organisations such as schools, Government departments and agencies, hospitals and

other public bodies. Furthermore, different departments or sections within an organisation may be registered with the CTPS whilst others are not. So checking CTPS numbers before you call really is important. Even more so because if you call a CTPS registered number on an unsolicited basis, you’ll be in breach of the Privacy and Electronic Communications (EC Directive) Regulations 2003, which states it is unlawful to make unsolicited direct marketing calls to organisations that have indicated that they do not want to receive such calls. If found to be in breach of these regulations, your business could face legal action and even a £5000 fine. The TPS enables Individuals consumers, sole traders, and (except in Scotland) partnerships to register their objection to receiving direct marketing calls with a central service. This means that the TPS file contains consumer telephone numbers as well as some business numbers.



The CTPS includes corporate bodies such as a limited company in the UK, a limited liability partnership in England, Wales and Northern Ireland or any partnership in

Scotland. It also includes schools, Government departments and agencies, hospitals and other public bodies. Therefore if you are contacting ‘business’ numbers for the purposes of sales and marketing, you must screen against both the TPS and CTPS files, as the TPS file contains business numbers also. If you are solely contacting consumers for the purposes of sales and marketing, then you only need to screen against the TPS file. All those in business (including charities and voluntary organisations) who make

unsolicited sales and marketing calls to individual or corporate subscribers need to comply with the regulations. Both 'cold' lists and customer lists should be screened against the Corporate Telephone Preference Service File before calls are made, to ensure compliance with the Regulations. There is an exception to the above and that is where the subscriber has already indicated to the calling business or organisation that they do not object to sales and marketing telephone calls. The Regulations stipulate that you should not call a corporate subscriber who has

previously notified you that unsolicited direct marketing telephone calls are unwelcome. The Regulations also stipulate that direct marketing telephone calls should not be made to corporate subscribers who have registered with a managed telephone register, the Corporate TPS. You will therefore need to ensure you do not contact any corporate subscriber who is registered with the Corporate TPS as well as screening numbers against your own in-house “do-not-call” list.

The Regulations cover telephone calls made to customer lists as well as non-customer lists. You will be able to continue to call a customer only if they have previously indicated that they do not object to you calling them. Should a subscriber with the Corporate TPS make a complaint about calls from a telemarketer, the TPS office will investigate the circumstances in which the call was made. A record of the complaint will be included on a regular report that is sent to The Information Commissioner's Office. The Information Commissioner’s Office has the

responsibility of enforcement under the Privacy and Electronic Communications (EC Directive) Regulations 2003. A subscriber can also contact the Information Commissioner directly to complain about a call being received. In 2006 it was reported by Business 2 Business marketing that telemarketing has received plenty of bad press in the past, which is partly due to bad practice in consumer marketing creating a poor reputation. B2C telemarketing was largely cleaned up by the introduction of the Telephone Preference Service (TPS). In light of this

apparent success, the Corporate Telephone Preference Service (CTPS) was established two years ago for the B2B world. The service has the same aim and was developed for SMEs, in particular the smaller companies that were apparently sick of being ‘hassled’ by telemarketers selling their wares. Both services allow number registration and a ‘do not call’ list, which is then available for telemarketing companies to buy. Any company ringing a number on either list theoretically faces a fine and even a custodial sentence. However, from it inception, critics have argued that surely once company ringing another company cannot be seen as a ‘nuisance’? After all, the call may provide useful information and even lead to sales and the provision of services. Is not one business contacting another the entire nature of B2B? Are these restrictions therefore creating a major barrier for companies and undermining the competitiveness of the economy? In an ideal world, most people would probably agree that allowing any individuals or

companies to opt out of marketing calls that they are not interested in receiving is a



good idea. However, receiving calls at home from window salesmen is vastly different from companies ringing at work to offer their products and services.

Nick Martin, general manager at Mardev, comments:

“There’s a real argument that listening to new ideas and being open to engaging with a small percentage of phone calls with relevancy, innovation or fresh thinking is something that should be considered as part of one’s job. The intrinsic worth of CTPS is of value. This relates principally to one group: small businesses, e.g. micro- businesses and corner shops.

“If they choose to be registered on the CTPS because being called for commercial purposes is damaging, then it’s fine. Calling these types of business is not beneficial for marketing anyway, as they usually receive an unhelpful answer.”8 According to the DMA, by June 2005 (one year after its launch) 336,000 numbers were registered. The number now stands at approximately 775,000: an increase of 130% between the first and second years of its existence. In 2006 it was stated that, the CTPS is growing but the year – on – year growth stands at over 100%, but 72% of this

occurred in the first six months. The number of companies owning over 100 telephone lines registering has gone from 69 to 105 in total, an increase of 52%. An increase in registrations amongst this group is particularly significant, as the CTPS was not intended to enable them to register; it was designed for companies at the opposite end of the spectrum. Growth in overall numbers is slowing and this may be due to the need for CTPS renewals, unlike the TPS, which is registration for life, companies have to renew their registration on the CTPS, this may suggest that companies are not renewing

their registration on the CTPS. As at 31st July 2008 1.3 million numbers were registered from 60,000 companies. Although it may be too early to say whether or not registration renewal is blunting the impact of CTPS, it appears that the proportion of business lines already barred to telemarketers via the service is already significant. According to telecoms regulator Ofcom, there are 9.15 million business lines in the UK, 775,000 of which are CTPS registered; in other words, 8.5 percent of the total. Given that this has been achieved

within two years, with no significant publicity, it is surely very worrying.

A possible explanation at this time for the growth in registrations, particularly amongst the 1000 plus employee companies is the lack of guidance or restrictions surrounding the registration process. There are no regulations stopping any member of staff within a company from registering any number, regardless of seniority, rank and approval. Anyone can register a number, including switchboard operators and receptionists. It is reported that, the decision to register is often taken arbitrarily at a low level rather than

being viewed as a strategic business decision. Junior members of the business are taking strategic decisions for the company when registering their company’s number with the CTPS. This is where the system falls down on its knees. CTPS needs an urgent review to prevent receptionists or any other members of staff, apart from the most senior decision maker within that business, from registering numbers to this service. The decision to block all unsolicited calls is not to be taken lightly and should be considered and made by business decision makers at a senior level. We wonder how industry is expected to survive, let alone thrive if we continue to strangulate the essential communication channels. It is believed that the CTPS is fundamentally flawed and is a bureaucratic fantasy that should never have left the

8 Business 2 business marketing July/august 06 – feature telemarketing- Alice Johnson. P 38,39, 40



notepad and that businesses should be able to contact businesses about business matters.

If CTPS registrations continue to increase at the current rate of 130% per year and the Companies House figure of 1.8 million limited companies in total in the UK is accurate, then the entire business audience will be barred from telemarketing within six years. The service was greeted with a mixture of alarm and dismay by both business marketers and telemarketing specialists, fearful that the new rules would fatally weaken one of the key B2B communication channels. It was predicted that the death knell would sound for telemarketing as a whole.

Unlike the TPS or FPS, with the CTPS, companies are required to re-register their number after a year. The DMA send out a structured email to ensure companies make a decision either way. At this point in time, 54% of companies registering numbers had between one and nine employees, and a further 29% had 10 – 49 staff. This places them in the small end of the business spectrum, and Tessa Kelly of the DMA says that this is actually evidence

that the CTPS is doing its job and assisting telephobic companies who demanded the introduction of the service in the first place. The companies who are registering don’t like the telephone, they don’t use it themselves as a marketing medium and it is not appealing to them. The telephone is not the best way to approach them. In this respect, the CTPS is proving a success. There was a fear last year that many large companies would register all of their numbers, but we’ve only seen this from a handful of organisations and most of these are hospitals or educational institutions.

Kelly explains that this belief came from the expectation that receptionists in large companies will take arbitrary decisions to block – register all their organisations numbers. But this has proven unfounded. However, B2B companies reliant on the future availability of this medium await them with trepidation, and the fear remains that – whilst telemarketing will not be rendered redundant overnight – it may have begun the process of a long and slow terminal

decline.

Marketing is an industry that is acutely conscious of its potential to create controversy, even hostility or resentment amongst both businesses and consumers. Consequently, it strives to avoid confrontation with Government and regulators wherever possible. This is why a culture of self – regulation and policing has been enthusiastically adopted; the industry has been eager to keep its own house in order, thereby avoiding meddling by higher posers. But such a culture makes regulation, when it comes, all the harder for

marketers to stomach. Without doubt, the best recent example of such legislation certainly in business – to business was the Privacy and Electronic Communications (EC Directive) (Amendment) 2004, which extended the right to opt-out of telemarketing activity to employees of incorporated businesses. The general public, sole-traders and partnerships had been able to register with the Telephone Preference Service since it was established in 1999 largely as a result of the backlash to the huge increase in outbound consumer – focused telemarketing. An EC directive required this option to be extended, and in June 2004 the Corporate Telephone Preference Service began taking registrations from incorporated companies and employees who no longer wished to receive telemarketing calls. Thereafter any company telemarketing to an opted-out number risked a £5000 fine. In 2004 the TPS registrations stood at 6 million. The vagueness regarding the repercussions of the CTPS has done nothing to calm the

fears of business-to- business marketers and call centre operators, many of whom have



been outraged by the imposition of the service. Their fear is that the opt-out on telemarketing is a heavy–handed means of tackling a relatively minor problem in B2B, and threatens to wipe out a principal marketing channel. For businesses such as those

without an outside sales force, who rely on telephoning potential prospects to drive new business and revenue, this change will have an enormous impact. SMEs are expected to be hit hard by the new rules as they rely more than most on the telephone as their main means of generating business. They tend not to have the resources to devote to advertising campaigns or large-scale direct mail efforts. Another group of businesses to be hit hard are those targeting the public sector. The CTPS acknowledges that a culture of mass opt-out has emerged from these institutions, with a number of hospitals registering over 1000 numbers. In some cases, senior staff in these organisations are

completely unaware that their main telephone number has been registered on the CTPS, possibly by a receptionist or other member of staff who is determined that the whole organisations does not wish to receive unsolicited telephone calls. There is no doubt that this will seriously impact other growth and profitability of many UK businesses. John Price, Chair of DMA’s Contact Centre Council, says despite some initial hysterical and ongoing confusion regarding what is and what isn’t allowed under the new regime, the jury is still out on the CTPS – it has not had a significant impact yet – registration numbers are still relatively low. He goes on to explain that the service has

achieved its original objective, which was to enable incorporated SMEs who were not covered under the old TPS to escape potential over exposure to telemarketing calls and, as such, is a success. When asked about the point that volume of registrations would make the CTPS a problem, Price is uncertain, but he points out, much of the work we do for our customers is with their existing clients, which he says is unaffected and will continue unabated. There is no threat to such opted-in marketing.

Maybe the CTPS, should prompt people to think about what they are doing in terms of the marketing mix, particularly volume marketers – there are other ways of getting business.9 Staff irritated by cold-marketing calls can sign up their employers to the CTPS without permission. One telemarketing firm Alchemis, found its switchboard number had been registered without its bosses knowing. Ian Forbes, chief executive only discovered this after surveying other companies. He said’

“It became evident after several calls that company after company were telling us that they had not idea that their numbers were registered. When I checked to see if our own switchboard number was registered, I was amazed to see that it was.” The DMA, which operates the service, does not require corporate callers to be senior members of staff or provide proof of identity. Some believe that this process should be tightened up, with some form of proper authorisation process. Tessa Kelly, Director of

Compliance at the DMA, said to register a number you need only to email or write a letter stating you had been authorised by the firm. Mr Forbes said he was concerned that the service was not being implemented properly. He said the lack of a status check was:

“..hugely worrying for businesses .. It seems there is nothing stopping a company from registering a competitor’s switchboard number”.10 The vast majority of Britain's small businesses feel that the Corporate Telephone Preference Service (CTPS) is a restriction on trade, according to new research carried out by leading business information provider, Mardev. The research, which revealed low

9 Business 2 Business marketing nov/dec 2004 Joel Harrison

10 Daily Telegraph (bus p.1) 16.9.2004 Richard Tyler



levels of awareness of the CTPS among those it was designed to help, also showed that smaller firms would prefer to have unfettered access to decision makers, and agreed that the CTPS could be a major barrier to them doing business with larger companies.

Says Nick Martin, General Manager, Mardev:

"There is evidence from previous research that indicates major firms are using the CTPS to shelter themselves from sales calls. This was not the intention of the legislation, which was designed to help very small firms. As one of our respondents puts it: 'this legislation operates greatly in favour of incumbent supply organisations, virtually eliminating new entrants to market'. When over 70% of small businesses told us they depended upon the

phone to do business, the CTPS, in its present format, is clearly not helping them." It seems contradictory that on the one hand the present Government is trumpeting the need for even greater competitiveness in the UK, whilst on the other making it harder for small companies. This issue came out very strongly in the research. As another respondent said:

"Generating new business leads is difficult enough in the present climate here in the UK.

Further restrictions could see many more smaller businesses going under."

According to the research, only 52% of small businesses were aware of the CTPS, though 73% used the phone to generate new business. Given the size of many organisations, Mardev believes this means that many could be opening themselves to the risk of heavy fines, since they are unlikely to be screening their calls against the CTPS suppression file. In addition, 66% said they would prefer to have freedom to market themselves in the way most appropriate to their own business and only 11% saw the CTPS as a useful tool for their business. Says John Price, Managing Director of Price Direct:

"As Chairman of the Contact Centre Council of the DMA, I know that many of our business

to business agency members are deeply concerned that this is a law too far. The phone is one of the most powerful media available to businesses looking to build new markets. At a time when global competition is pushing prices down, we should not be adding legislation, which puts UK businesses at a disadvantage. “Small businesses know that gaining access to top decision makers is vital, and the phone is the key tool in letting them make and build those high level contacts. For many of them this is a piece of legislation which just increases the difficulty they have in

building new business and in competing on a level playing field with existing suppliers. As one respondent pointed out, it's another overhead for the small business which is not borne by their larger competitors." The in depth survey was completed by over 115 small firms (with less than 20 employees) across the UK. 11

11

Mardev.com November 2008 N.Pritchard N.Lawrence



What is the future for CTPS – is there light at the end of the tunnel for UK PLC? There was hope in August 2007 that there was light at the end of the tunnel for reform of the CTPS. With the change in political climate following Gordon Brown's ascendancy Business 2 Business marketing reported that it has created an opportunity for a change in the rules for Business-to-Business telemarketing. The Corporate Telephone Preference Service (CTPS) was implemented in response to an EU Directive by the Blair Government, and Gary Kemp, MD of Connection2 and member of the DMA Contact Centre & Telemarketing Council, believes that the wind of change currently sweeping through Westminster might facilitate a rethink:

“Getting rid of unnecessary bureaucracy is high on the agenda of The Department of Business Enterprise & Regulatory Reform [formerly know as the DTI] and the issue has also been taken up by the shadow Chancellor.” Says Kemp:

“It might be an apposite time to look at this issue.” Kemp adds that the Department has also stated its willingness to address areas where EU Directives have been 'overzealously enacted'. He suggests that at best, attitudes to these directives have been inconsistent across the continent with many countries ignoring them altogether. To this end DMA Council Chair John Price and Kemp have scheduled a meeting with a representative at the Department early this month, with the aim of discussing concerns

over the CTPS and the likelihood of securing a change in the rules. Meanwhile, plans for a research project to identify the 'unforeseen consequences' of the implementation of the CTPS on small businesses – the very audience it was designed to protect – have been put on hold by the DMA. The association has also to date declined to commit its support to B2B Marketing's campaign for a change in the rules regarding the CTPS.12 In 2007 Business 2 Business marketing reported in August that, this month is expected to see the DMA submit its long-delayed proposals to the Government for a rethink of the

Corporate Telephone Preference Service (CTPS). The proposals are aimed at lessening the impact that the CTPS is having on B2B telemarketing, and were drawn up by the DMA's Contact Centre Council in October last year. The DMA has denied stalling on processing the proposals, explaining that approval requires them to go through two rounds of evaluation by its governance committee, which meets monthly under association Chair Rosemary Smith.

The Department for Business, Education and Regulatory Reform (BERR), which has taken on responsibility for the CTPS since its inception, is expected to take several months to evaluate them, before potentially passing them on to communications regulator Ofcom.13

12

Business 2 Business Marketing 30th August 2007 13 Business 2 Business Marketing 30.4.2008



The DMA Contact Centre Council (DMA CCC) has estimated that the CTPS legislation costs the UK economy well over £100 million per year in lost productivity, without offering any discernable benefit in return.

This is according to Council member Gary Kemp (also MD of Connection2) who has compiled a document stating the case for a change in the rules for B2B telemarketing – otherwise known as the Corporate Telephone Preference Service (CTPS). As part of this, it seeks to put a figure on the cost of the CTPS to the UK economy for the very first time: “I've estimated this at £120 million per year,” explains Kemp:

“This is a rough estimate and a conservative one, but it is a significant figure which, when combined with the absence of any benefit from the legislation, significantly undermines arguments in favour of the CTPS.” The figure will form part of a ten-page submission that was made to the Department of Business, Enterprise & Regulatory Reform (BERR) at the beginning of November. This submission also includes the following recommendations for CTPS:

• That all registrations to the CTPS must be signed off by a Director. This would prevent administrative staff making unauthorised registration and decisions.

• That it is only available to micro-businesses, the audience it was originally designed to protect. This would prevent its use by large corporates who are able to filter telemarketing calls through technology and/or gatekeepers.

• That block registrations (i.e. registrations for large groups of numbers, such as an entire company) are banned.

• That the requirement for annual re-registration is maintained. Subject to approval or modification by BERR, the proposals would then be put to OfCom. Kemp suggests that if BERR backs the proposals, OfCom is unlikely to obstruct them. He expects the earliest likely timescale for a change in rules would be summer 2008, although adds that it could possibly be sooner.14 Unfortunately, on 20th November 2008 Mike Lordan, Director of Consumer Services at

the DMA reported that they had submitted a document to BERR a few months ago and a follow-up meeting was held in early November 2008, whereby the DMA have been asked to submit more information, however, their belief is that BERR consider improvement or reform of the CTPS to be a low priority and currently, it is not part of the legislative calendar. Back in July 2007 the Federation of Small Business, were also taking an interest in the CTPS and it was reported that opposition to the Corporate Telephone Preference Services (CTPS) is gathering pace, with the Federation of Small Businesses (FSB) now joining the protest. The FSB was one of the few representative bodies to voice support for the CTPS in the consultation phase in 2003, suggesting at the time that:

“Incorporated companies should be given the same level of protection as similar unincorporated businesses.” In other words, they should be allowed to exempt themselves from telemarketing calls.

14 Business 2 Business Marketing 8th November 2007



However, according to Stephen Alambritis, head of public affairs at the FSB, the federation would now welcome a review of the legislation regarding telemarketing.

“Members are concerned that it is a dampener on economic activity,” He explained: “Because the economy is currently so tight, and competition so tough, we believe there is a need to look at revision.” B2B Marketing can also reveal that the level of support for the CTPS in the planning stages (in 2003) was far lower than has previously been understood. An evaluation of the consultation correspondence sent to the DTI regarding the proposed changes to

telemarketing rules demonstrated that only 20 favourable responses were received (regarding the extension of the TPS to business) in comparison with 270 responses objecting to the proposals. (This figure excludes responses relating solely to proposed changes to email rules, which were also proposed within the same consultation process.) This calls into question the rationale for proceeding with the proposals. The CTPS was implemented in 2004 to function as an extension of the consumer-focused Telephone

Preference Service, and protect small businesses from unwelcome telemarketing calls. However, as well as placing undue restrictions on small businesses to market themselves, the CTPS is also being misused by larger organisations as an additional telemarketing filter.15 The head of policy at the Federation of Small Business, Andrew Cave, commented to me in August 2008 that the FSB had no policy relating to this subject or to the subject of

marketing law. However, The Forum of Private Business may take up the gauntlet, with CEO Phil Orford taking a keen interest in the subject and recognising the importance of freedom of communication between businesses as a prerequisite for reciprocal opportunities for businesses to grow and create alliances. Large companies now account for the majority of registrations on the CTPS data base.

As at August 2008 line registrations on the DMA database stood at 1,342,112, however this only accounted for 70,000 companies, clearly showing that larger businesses are registering multiple lines. These figures clearly show that it is the larger companies that are registering on the CTPS database, rather than the micro companies, such as the local corner shop that the CTPS law was meant to protect. The upshot is that with larger companies and organisations such as health authorities, who are registering multiple lines, will be blocking the SME from making sales calls to them. Many SMEs are reliant on larger businesses for their income, thus this will potentially damage the

main source of income for many SMEs.

15 Business 2 Business Marketing 9th July 2007



The SME community – marketing law and the SME community and the part that SMEs play in UK economy

“Micro, small and medium sized enterprises (SMEs) are the engine of the European economy. They are an essential source of jobs, create entrepreneurial spirit and innovation in the EU and are thus crucial for fostering competitiveness and employment. The new SME definition, which entered into force on 1 January 2005, represents a major step towards an improved business environment for SMEs and aims at promoting entrepreneurship, investments and growth. This definition has been elaborated after broad consultations with the stakeholders involved, which proves that listening to SMEs is a key towards the successful implementation of the Lisbon goals.” So says Günter Verheugen, Member of the European Commission Responsible for

Enterprise and Industry. Micro, small and medium sized enterprises (SMEs) play a central role in the European economy. They are a major source of entrepreneurial skills, innovation and employment. In the enlarged European Union of 25 countries, some 23 million SMEs provide around 75 million jobs and represent 99% of all enterprises. However, they are often confronted with market imperfections. SMEs frequently have difficulties in

obtaining capital or credit, particularly in the early start-up phase. Their restricted resources may also reduce access to new technologies or innovation. Therefore, support for SMEs is one of the European Commission’s priorities for economic growth, job creation and economic and social cohesion. The category of micro, small and medium sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43

million euro.16

The Importance of a European SME definition in a single market with no internal frontiers makes it essential that measures in favour of SMEs are based on a common definition to improve their consistency and effectiveness, and to limit distortions of competition. This is all the more necessary given the extensive interaction between national and EU measures to help SMEs in areas such as regional development and research funding. In 1996 a recommendation establishing a first common SME

definition was adopted by the Commission. This definition has been widely applied throughout the European Union. On 6 May 2003, the Commission adopted a new recommendation in order to take account of economic developments since 1996. It entered into force on 1 January 2005 and will apply to all the policies, programmes and measures that the Commission operates for SMEs. The average European enterprise employs no more than six people so most can be considered as SMEs. However, the new definition takes into account possible relationships with other enterprises. In certain

cases, those relationships, particularly if they create significant financial links with other enterprises, may imply that an enterprise is not an SME. The main objectives of the new definition are to aid in the promotion of micro enterprises, to improve access to capital, to promote innovation and improve access to research and development and to take account of different relationships between enterprises. The first step to qualify as an SME is to be considered as an enterprise. According to the new definition, an enterprise is ‘any entity engaged in an economic activity, irrespective of its legal form’.

16 Extract of Article 2 of the Annex of Recommendation 2003/361/EC



The wording is not new. It reflects the terminology used by the European Court of Justice in its decisions. By being formally included in the recommendation, the scope of the new SME definition is now clearly marked out. Thus, the self-employed, family

firms, partnerships and associations regularly engaged in an economic activity may be considered as enterprises. It is the economic activity that is the determining factor, not the legal form.17 There were an estimated 4.71 million private sector enterprises in the UK at the start of 2007, an increase of 212,003 (4.8%) on the start of 2006. These levels are the highest since the time series began in 1994. These enterprises employed an estimated 22.7 million people, and had an estimated combined annual turnover of £2,800 billion.

Small and medium sized enterprises (SMEs) together accounted for 99.9% of all enterprises, 59.2% of private sector employment and 51.5% of private sector turnover. Employment in SMEs is estimated at 13.5 million, 0.3 million (2.0%) higher than in 2006. Turnover in SMEs is estimated at £1,440 billion, £83 billion (6.1%) higher than 2006. Table 1

Number of enterprises, employment and turnover by number of

employees, UK private sector, start of 2007

Enterprises No of Enterprises Employment Turnover

(thousands) (£ millions)

All enterprises 4,679,080 22,734 2,794,684

With no employees 3,460,360 3,774 222,382

All employers 1,218,720 18,961 2,572,303

1-9 1,019,295 3,764 413,211

10-49 166,815 3,265 409,991

50-249 26,690 2,653 394,707

250 or more 5,915 9,279 1,354,395

Department of Business Enterprise and Regulatory Reform STATISTICAL PRESS RELEASE 30 July 2008

The annual business survey February 2008 reported findings from the Annual Small Business Survey 2006. The survey was a large one involving a total of 9,905 interviews;

8,949 of them with businesses with employees. The report presents the survey findings relating to the ‘SME employers’ rather than for all businesses, unless otherwise stated. The 2006 ASBS findings show improvements in a number of key areas. The survey’s core findings in relation to growth and growth ambitions both show gains. The data also describe a substantial increase in the proportions of businesses engaged in innovation and providing training. Less positive findings include more widespread reporting of some obstacles to business success. Slightly less than half of SME employers (48%) introduced new or significantly improved products or services in the past 12 months. Of these, three-quarters (73%) introduced innovations that were new to their business with 26% believing their innovation to be completely new. A third of SME employers (33%) had introduced significantly improved or new processes to their business. Of these, three-quarters (78%) had introduced processes which were simply new to their business and one fifth (19%) had introduced completely new processes. These findings represent a marked improvement on those reported in 2005 which showed that 32% of SME employers had introduced some kind of new product or service in the year before the

17 Enterprise and Industry Publications 1.1.2005



survey and 22% had introduced some kind of new process or way of working in that year.

With marketing laws increasingly impacting UK business, especially the CTPS, it has to be questioned as to how SME’s will be able to sustain the ability to compete, innovate and create new products.

Research relating to the obstacles to achieving business success showed that, most SME employers perceived at least some degree of challenge to their success; only two% did not report any obstacles. The most frequently reported biggest obstacles were: competition in the market (15% of SME employers); regulations (14%),;Tax, VAT, PAYE,

NI and business rates (12%); the economy (10%); and cash flow (10%). Recruitment problems and skills shortages were cited by 6% and 4% of respondents respectively as the biggest obstacle. Slightly lower proportions cited problems associated with the availability and costs of premises and access to finance. 1% of respondents were most concerned about a lack of managerial skills and expertise. Other issues, including pensions and keeping up with new technology, were each cited by less than 1% of respondents.

For the most part, the biggest obstacles cited and their rankings are comparable with those reported in 2005. The proportion citing “Taxation, VAT, PAYE, National Insurance and business rates” rose from 7% to 12%. Regulations were cited by 14% of respondents in both 2005 and 2006. Almost two in five (37%) of the SME employers that reported regulations to be an obstacle cited Health & Safety regulations as the main area of difficulty. Employment, tax and sector specific regulations were cited by 16%, 15% and 12% of employers respectively. One in eight (13%) of the SME employers

that reported regulations as an obstacle were unable or unwilling to identify a primary concern.

Due to the low awareness amongst marketers and in general amongst SMEs it is not surprising that questions specifically relating to marketing regulations were not asked in this survey and that businesses did not respond with specific issues relating to these laws.

For many respondents, the issue identified as their single biggest obstacle to success was one of several obstacles listed by them as relevant. Combining results for all obstacles reported (either with or without prompting by the interviewer), the most frequently reported obstacles were:

• regulations (60% of SME employers);

• taxation, VAT, PAYE, National Insurance, Business Rates (58%);

• competition in the market (55%); and

• the economy (53%).

Respondents who cited regulations as an obstacle to the success of their business were asked which specific regulations they considered to be an obstacle, and in what ways.

Below the chart shows that Health & Safety regulations are the aspect of regulation that cause the most widespread concern. These were identified by 37% of the SME employers who perceived regulations to be an obstacle to business success (this equates to 22% of all SME employers). This data suggests that for most SME employers the

majority of difficulties with regulation fall into three categories: (i) understanding what is required and deciding how to respond, (ii) the administrative burdens associated with compliance and (iii) the compliance costs involved.



Why regulations are problematic

Regulations in

general

Health & Safety

Employment

Tax

Environment

Planning /

building

Minimum Wage

Reason why an obstacle (percentage of respondents)

Difficulty/time/effort in deciding how to comply

41 36 24 14 23 25 4

Paperwork / administrative procedures

31 28 21 15 19 12 -

Costs of making changes to ensure compliance

18 27 23 30 43 22 71

Uncertainty about whether or how regulations apply

6 11 9 5 7 4 1

Difficulty/cost in obtaining advice

5 4 3 7 4 4 8

Competition from businesses that don't comply

2 3 2 3 5 2 8

Lack of consistency 4 3 3 3 2 7 11

Restrictive / intrusive / no flexibility

4 3 9 3 4 23 2

High level of taxation 1 - 2 29 - - -

Base (unweighted): All SME employers citing each regulation as main obstacle

670 1549 596 408 339 225 142

The Annual Survey of Small Businesses’ Opinions 2006/07 BERR – Business Enterprise and Regulatory Reform. IFF Research

Ltd February 2008

Regarding advice taken by SMEs concerning regulations, approximately two thirds (61%) of SME employers had consulted some source of advice about regulations in the 12 months prior to being interviewed. The level of advice required by businesses to comply to marketing laws can be extensive as there only a few specialist marketers and firms who are aware of exactly what businesses need to do to conform.

SME employers most commonly sought advice on regulations from private sector professionals and consultants. The most consulted sources of advice were accountants (16%). One in eight consulted a Trade Association (13%) and 9% consulted published sources, (including resources on the Internet). A further 6% engaged consultants and

5% solicitors. One quarter consulted a Government source of some kind (26%). These included: DTI and SBS (now the Department for Business Enterprise and Regulatory Reform) and local authorities (both 5%) and ‘other regulators’ (6%).



Sources of advice consulted on regulations

All SME

employers

(per cent)

New

Businesses

(per cent)

Established

businesses

(per cent)

Accountant 16 17 15

Trade, business associations 13 10 13

Internet, library, press 9 10 8

Other regulators (HSE, Environment Agency,

etc) 6 6 6

Consultant 6 4 6

DTI, SBS, other Government 5 5 5

Solicitor 5 6 5

Local authority 5 7 4

Business Link(or equivalent) 4 6 3

Customers, suppliers, SME, friends, family 3 3 3

Bank 2 3 2

Chamber of Commerce 2 2 2

All Government sources 26 31 25

None 35 35 35

Base: all SME employers 8949 1429 7484 The Annual Survey of Small Businesses’ Opinions 2006/07 BERR – Business Enterprise and Regulatory

Reform. IFF Research Ltd February 2008



How Do Marketing Laws Affect The Small Business? Given that the SMEs play a central role in both the European and British economy and indeed the worldwide economy, how are British SMEs now coping with the rigorous burdensome Gold Plated legislation forced upon them? How are they coping in comparison to their larger, yet minority counterparts – the large businesses? With more than 60% of SMEs citing regulations as their single biggest obstacle to success, how are the SMEs expected to cope with the further burden of restrictions placed on marketing their goods and services? Clive Mishon Chairman of the ISP (Institute of Sales Promotion) says:

“Everybody is affected, as there is so much red tape and bureaucracy now. Large

companies have more resources than the smaller businesses so it is probably harder for the small business. However, the ISP legal advice service deals with both general and specialist requests for assistance so our members have access to the largest source of legal assistance in the area of promotion than any other similar trade organisation.” He goes on to say:

“The ISP remit is to promote and protect the promotions industry. We have a legal advisory service and provide education that offer practitioners a professional qualification in the subject. These ISP qualifications include the certificate and diploma in promotion, and these include digital and direct marketing law. These courses offer a good introduction to the CAP Code and laws but I think the industry needs a better grasp of the code and to use the legal services where necessary. Now I think about it, there may be a need for a dedicated diploma in marketing law.” There are of course obstacles just simply because of the SMEs size and resources that they have in comparison to the large business. Danny Lopez CEO of UKTI (UK Trade and Investment) comments: “My view is that it always has a much greater impact on small business because in a larger business you have more resource and far more, what I call, syndication of blame, which essentially means you do a bit of work and pass it on to someone else, who in turn

passes in on to someone else and you all have input - it’s a bit like insuring the work. In an SME you don’t have that and the buck stops with one or two people and if they can’t solve it, then they have got a problem and the problem can have a huge impact on the company. So, based on that, in these circumstances, I would say that far more of an effort needs to be spent on SMEs as potentially it can have far greater impact on two things, one is their bottom line and two is their top line – their brand, culture and effectiveness and this could have an impact on both.” The issue of SME resources compared to large businesses seems to be a view that is consistently upheld between many influential members of institutions and Government. Sir Paul Judge, President of CIM (Chartered Institute of Marketing) comments: “All regulations tend to affect the small business more, as generally they have a lesser

resource in this area. The larger businesses tend to have managers responsible for these areas and large specialist legal departments to assist in matters relating to marketing

law.”



At the Institute of Direct Marketing, Ed Weatherall Chair of the IDM Business to Business Committee and Managing Director of a small direct email marketing company, Concep, comments:

“The problem here is related to time, money and personnel resource. Does the small business have the time to know all the laws? They do not have time to know all about the TPS, FPS, data protection from both UK and European Commission, and then relate them to the advertising laws and all the other marketing laws. Many of these overlap and therefore some laws change or contradict depending upon the circumstances so it makes it much more difficult for the small business to comply and thus these businesses are most likely making honest mistakes. Sometimes, also in the large companies, there can be

problems too. Decisions made from the top down can be lost in translation to the person implementing, so people can get lost in a large organisation i.e. if a person in an events company needs to meet its targets to get say 150 people to attend an event, the person responsible for meeting the targets may cut corners in terms of data protection in order to meet the targets which they are under pressure to meet.” Certainly it appears that the small business suffers more when needing to comply to the same legislation as the large businesses. The SME needs to be multi tasking and

keeping the business flourishing whilst coping with increasing legislation. Lord McNally leader of the House of Lords Liberal Democrats, comments:

“The same applies to legal compliance in general; the smaller the business then this is more onerous. The small business has to do the compliance and selling as well. Large companies can afford to carry a second department to ensure that they are ticking all the right boxes. That is why there is a constant drive for lifting the burdens on small business and this has to carry on because, again, it is about finding the balance and protecting the consumer, without inflicting so much bureaucracy and red tape and compliance burdens on businesses, which are pretty heavy on the small business. It is a continual battle. In terms of the EU, I would have thought with a single market there will, at some time, be an attempt to get some convergence of the laws, particularly on direct marketing as there will be companies who will be doing direct marketing Europe wide. I was amazed when I worked for the retail consortium in the 1980’s and coupons were certainly then a really effective direct marketing tool with 5p or 10p off – people really used them and it did have

an impact on sales. Mail order in those days accounted for around 4-5% of retail sales, but now of course with the Internet that has changed. I think the Internet has a more positive image and now people like buying from the Internet. Internet buying and selling has a more attractive image, partly because it is so convenient and people are taking the initiative, but saying that, once they have got you, they have really got you!!” It should also be considered that laws can affect SME to a greater extent, but some believe that marketing law is not specific in terms of size of business and can also

especially affect those businesses operating in industries such as financial services. Rosemary Smith, Chairman of the DMA (Direct Marketing Association ), comments:

“I think marketing law is not specific in terms of size of business, it is related to anything a business communicates in terms of marketing, however, some sectors do have further binding codes. Generally small businesses are not so aware of marketing law and information is difficult to find or access. Their options for information on the subject are probably limited to the Chambers of Commerce or Business Link, but the level of guidance here is not specific and not very informative.” It may be considered that larger companies operating in specific industries such as retail, finance or banking actually may need to be larger businesses, simply by the nature of their industry and the scale of their need to meet the compliance requirements set out by Government. Because of their resource and knowledge of these matters, they are able to dedicate specific resource and therefore manage to gain

advantage over the smaller businesses by the shear scale of their operation and



knowledge, and thus take advantage of loopholes in the law. Sally Muggeridge, CEO of the IPT (Industry and Parliament Trust) comments:

“Large companies, such as Tesco, are very aware of the laws. They even use grey areas of the law, whereby they use loopholes such as gaining tax benefits for making charitable donations and collections, when all they do theoretically is put certain charities boxes by the tills and collect money from their customers for the charity, so in effect, they are simply collectors rather than the donators. Tesco will of course argue and rightly so, that if it were not for their stores’ presence and their decision to put collection box in front of their customers, there would not be any opportunity for a charitable donation. However, the average SME will, in the main, be unaware of most of these laws as they are

generally just managing to keep their heads above water and balancing their books. At the IPT, we run training programmes and bring businesses into the House of Commons so that they can get a better understanding of how things work and to bring them more awareness on these matters. Conversely, we also bring MPs into businesses, so they can have a greater appreciation of the challenges that SMEs face. SMEs just really do not have the time or resource to always comply accurately. An example to illustrate this is that the head of consumer banking at HSBC told me, that 80% of their time is spent on how to comply with European Legislation and making sure they know what legislation is

coming along. If you wanted to set up a small financial company, it would be very difficult for an SME to manage the need for compliance, as they just would not have the resource to deal with these issues.” The main problem with marketing laws and the SME, may be that the SME is simply not knowledgeable or aware of the general marketing laws that may affect their business. Phil Orford CEO of the FPB (Forum of Private Business) comments:

“Unfortunately I don’t think they are very knowledgeable at all! The FPB is in a similar situation, we are a small business too, employing just 30 people and we are not knowledgeable at all about laws surrounding marketing communications. We are aware in general about laws and requirements such as TPS, and direct mail laws overall, but not in the absolute detail. We will be looking at this in much more detail in the near future as it is a communications issue and we need to communicate with our members. We have some anecdotal evidence from a business partner/associate (bank) that some of our

customers perceive our email newsletter communications as a sales tool to sell third party products, which is not the case or the intention, rather than information and awareness related, which is our intention. We need to inform our members of their entitlements and benefits from time to time and make them aware of new issues and regulations that could affect their business.” Richard Payne-Gill, Group Marketing Director and Khurram Akram, Head of Compliance for data provider LBM respond to their belief that it is acceptable to register

switchboard numbers of a company registered with the CTPS but not direct dial numbers of a company.

Richard, that is interesting what you say about the direct dial of individuals in large corporates, if you imagine that most small businesses do not have a switchboard so hence, when they are called, people are often dialling straight into senior company members and individuals, how would you feel about this?

“A small business could get overrun with calls and I accept there is a conflict of interest here. They should have a right to be put on the register. At LBM, what we have an issue with is the permanence of the records on the TPS database and the fact that people’s circumstances change so they may at sometime want to remove themselves from the database. The vast majority of small businesses will not have an issue with this as they are not targeted, it is mainly corporates that are targeted heavily, the majority of data we sell is for those businesses with more than 10 employees. My concern would be about the

small number of businesses that are over reacting and the ground swell from the



consumers’ right to screen out calls. On our files only 50k of active B2B files are screened out because of Corporate TPS but 460k of our active file is screened out because they are non-incorporated businesses that appear on the TPS register. We are not aware of a mechanism by which the non- incorporated business can de-register their details, we think that all businesses regardless of legal entity should go on the register for no more than 12 months as opposed to a lifetime. Also, one individual can freely register another individual! So any person could add another person to the register without their consent. It’s about a balance between intrusion and free commerce and currently the benefits of the economy are not really taken into account. The assumption appears to be that all direct marketing is a nuisance when most is well-targeted (it needs to be to justify the marketing investment) and offers benefits to all businesses – eg. what business right now

would not be interested in a proposition that reduced their costs. If they are on the TPS register they are less likely to hear about it.”

Small and medium sized enterprises create the majority of jobs in the EU, and to do so they need to be able to grow. Enterprises cannot grow unless they are able to compete head to head with their rivals. The role of the European Commissioner for Enterprise and Industry is at the core of creating the conditions which enable European enterprises to be strong competitors, at local, regional, national, European or global level, which can only be done in close partnership between the EU and its Member States.

He Says:

“We need to break down barriers, tear up red tape throughout the single market, and persuade vested interests to change their ways. My major duty is to help persuade European Governments to make the necessary reforms to make life simpler for enterprises. I assist President Barroso as Vice Chair of the Group of Commissioners on the Lisbon Strategy (Strategy for Growth and Jobs), and he has entrusted me with coordinating the Commission’s role in the Competitiveness Council. This is where ministers from the 27 EU Member States come together to debate policies which can have massive impact on firms and their current and future employees. Our joint goal is to make European enterprises, small and big, world leaders across a range of fields.”

He goes on to say:

“Regulation is important and necessary, but implementation can also entail costs. Some of these expenses are linked to legal obligations to provide information either to public or private parties. Some legal obligations to provide information have become needlessly time-consuming, excessively complicated or useless. Unnecessary and disproportionate administrative costs may hamper economic activity and/or irritate business, citizens and

public authorities. By reducing unnecessary reporting requirements businesses can spend more time on their core activities which may reduce production costs and allow additional investment and innovation, which in turn should improve productivity and overall competitiveness.” 18

According to estimates, it would be feasible to reduce administrative costs by as much as 25% by 2012. This would have a significant economic impact on the EU economy – an increase in the level of GDP of about 1.5% or around 150 billion Euro.

Nevertheless, the EU approach to better regulation needs to take into account the overall benefits and costs of EU rules. Information requirements are sometimes necessary, for example, in ensuring consumer, health and environmental protection. It is a question of ensuring a proper balance where administrative burdens are proportionate to the benefits they bring.

18 Gunter Verheugen European Commissioner for Enterprise and Industry



Is the Government Doing Enough to Help Businesses and What Effect is this having on UK PLC? Marketers are facing a climate of increasingly restrictive legislation. Heavy-handed Bills are regularly placed before Governments in the UK, the US and further afield. Marketers face confusion over the number of laws, regulations and codes that they have to be knowledgeable about. And increasingly, marketers even need to know about laws that have been passed elsewhere in the world. But such skills are not necessarily a marketer’s forte. How can the marketing community respond to this ever more complex legal environment in order to continue to do its job responsibly and effectively? Sally Muggeridge CEO of the IPT comments that:

“We usually get involved in proposed legislation only to the extent of trying to make MPs better understand the possible impact and ramifications of proposals. Usually proposed changes in the law start with a perceived problem, generally alerted by the media, for example ‘junk mail’. MPs then think it is a problem that needs to be halted or controlled, so they draft legislation against it. The problem is that they legislate against a minority who are doing things badly and instead affect the majority who are doing things well and also pay somewhat better heed to the laws of the land. Laws tend to be reactive. It often

starts with an MP’s constituents getting up in arms about something, inducing the MP to get up in arms, and then the whole of Parliament gets up in arms. Unfortunately what happens in practice is that in the process, not all the real issues and consequences are thought right through and we therefore get laws that are fundamentally flawed – a classic example of over-hasty reactive legislation would be the Dangerous Dogs Act. At the IPT, we have a marketing programme that we have put together with Bradford University, whereby we introduce MPs to the principles of marketing and thereby MPs can have

better knowledge with which to judge issues if and when they are raised, and have a good understanding of the importance of marketing within business and the vital role that it plays.” “It is important to know, that every time legislation is proposed and goes through, an impact review will be conducted and is available for discussion for interested parties to add comments. You can sign up for this on the European website and make comment on proposed legislation, however, in the UK this is not done so well and is not so easy to

make comment on this documentation, as the legislation could start off in the House of Lords or House of Commons. On 3rd December we have the Queen’s Speech, where the Queen presents what her Government is going to do for the next 12 months, along with a long list of topics that Government will deal with. Companies and institutions have a responsibility and an obligation to market themselves when legislation is proposed and should push through for MPs to understand the challenges they face. Furthermore, they should always have a relationship with their MP, as they never know when they will need that MP to help them. Having a good relationship with their MP means that the MP can have a good understanding of the business issues they and their business community faces and is then, therefore, well briefed on supporting these matters. Regulations in the UK are very burdensome for businesses and the fact is that UK businesses are extremely diligent in terms of the way that they approach and comply to these regulations.

A – you have to put these practises in place, and



B – MP’s don’t understand how extraordinarily burdensome these regulations are for business.

What is important to recognise is that regulations affect all areas of business For example legislation relating to direct marketing will ultimately impact all areas of business from employment law to general day to day marketing activities. So, when a business has reorganised itself to deal with regulation, then a further regulation comes into practice, they have more and more burdensome issues to deal with. There is certainly a misconception in this area and a dichotomy in what MPs and businesses believe to be a problem. We know this at the IPT because we did a survey of 500 businesses and 9 out of 10 businesses thought these regulations were a tremendous burden and 3 out of 10 MPs

thought likewise. So there is a huge difference between what businesses think and what MPs think.” Sally goes on to discuss how regulations can impact businesses and the issue of consequences:

“Taxation is another issue. At a recent IPT event for SMEs we discussed a piece of legislation on taxation of empty office space. This law is absolutely crippling for

businesses that have empty office space. We have heard that in areas such as the North of England, where Government put money in to regenerate these areas and encourage the building of new offices to help businesses start up and grow, these office buildings are now empty, but because the tax is so crippling for the businesses, they are now pulling the buildings down to avoid taxation! What are we going to do when the economy rejuvenates again and we have no office buildings in these areas? The problem with legislation and particularly burdensome regulation is that sometimes the consequences are just not thought through.” On the point as to whether Government could do more, Sally comments:

“I think the point to consider here, is that not only should Government understand business, but also businesses should really understand how Governments work. We had an MP who came and did a presentation to one of our groups at the IPT training programme and he brought his in tray for the day, as an example of what they receive.

The in tray ranged from annual reports sent in by companies, to notes with little or no explanation as to what they were about. Then the MP selected one item that was clearly documented as to the issue and laid out in a way that was clear and easy for the MP to understand exactly what the issue was. So businesses really need to understand better how they can help MPs help their business” Lord McNally, Leader of the Liberal Democrats, House of Lords, talks about the ramifications of the Data Protection Act, and whether marketers really are their own

worst enemy when it comes to marketing laws:

“The full ramifications of the Data Protection Act are probably not even well understood by the people that passed the Act, never mind the general public or marketers! The problems is reacting to complaints, which are similar to when politicians go around to houses and we see signs on the doors for no callers, leaflets or newspapers etc, we are faced with the same problem! There is obviously a need to look at what restrictions there are on direct marketing. I think the problems with this is that direct marketing in itself has an image problem, because people associate it with heavy pressure selling from double glazing and time share sales and kindred trades so over the years it has a bad image. I still get angry about a letter that came through the post offering £1million, the worst offenders were Reader’s Digest with their free prize draw. It is this type of thing that gives marketing a bad reputation amongst the public because they think it will be a scam or pressurised into buying something they don’t want. It is an intrusion in a way, because the seller is taking the initiative. If you walked into a shop in the high street such as a furniture store, the

sales person is entitled to give you a pitch because you have taken the initiative and the



first step by walking into the store, but if the sales person suddenly arrived at your front door to say, can I sell you a new suite of furniture, he is taking the initiative and that makes people nervous. There are bad examples of direct marketing, which make people hostile to the concept. It’s something that people in your industry need to deal with.” He goes on to make an interesting connection between data protection law and technology:

“What does worry me is that it is an approach to technology which is in danger of fossilising business communications. If I say, the only way you can communicate is by writing them a letter, when in fact you could email or phone them, then this is a restriction

on using technology to interact. The dilemma as you well know is there are technologies that can start going through data bases of phone numbers and carry on making automatic phone calls and let me say, the political parties are not immune to this criticism. You had better talk to the Conservatives about this as they can afford bigger data banks than we can! I just think it needs to be looked at and certainly in my mind there is a worry that unless all are careful we are going to fossilise communications particularly in business – to - business communications. If we don’t keep this under review and see if there are better ways, and more sophisticated ways, of dealing with what can be for

small businesses, and indeed all businesse,s time consuming and totally unproductive.”

Clive Mishon, Chair of the ISP, comments about advertising law and feels that the Government should heed their own words in connection to the power of advertising. He says:

“If they think that advertising and promotion are such powerful means of communication that can change people’s lives (to the extent that they say), then they should use this powerful means of communication to create positive messages to the public, in areas such as active and healthy living – we really need some joined up thinking here and move away from the thinking that if you ban things then the problems will go away.” He also talks about co-regulation and says:

“We (the ISP) engage with other disciplines that are involved in co-regulation. If I came

across a promotional issue, we help, because we do not want to fall foul of compliance. We come across prejudice in promotion due to other people’s perception of our industry. I am also a Director of a direct marketing company and am trying to change the perception there too, which is a challenge. It stems from the 1980’s when promotional content was driven by the FMCG marketing and promotion was the cuddly toy you got on the back of the Frosties packet! We have debated the subject of promotion in the House of Commons recently.”

Ed Weatherall, Chair of the IDM B2B council, thinks that it is important to get the right people in place early on:

“Get the right people in place from the outset, for example a recent talk at the IDM by Lord Puttnam emphasised that he would be the kind of person to be involved in consultation and not the civil servants. They need to invite people to discussion with varied groups and different demographics to keep the discussions unbiased.”

Lord Cotter, SME spokesperson for the Liberal Democrats, comments that:

“A lot more needs to be done to keep an eye on marketing law. The concept of Regional Development Agencies was a good thing, but when it becomes an unelected type of quango it becomes a closed shop. We should have stronger council representation here supported by the Regional Development agencies. Then the SBC – The Small Business Council was developed which was welcomed as there was a similar type of organisation

in the USA called The Small Business Bureau, which was working very well. I wanted to



have this similar type of set up, whereby there was one person in this organisation responsible for the small business who was independent and the organisation was independent. But our set up with the SBC was not independent in my opinion, the head of the organisation seemed to simply sit in on meetings when we met and make the tea for the Minister, rather than being the grit in the oyster and making independent changes. Money was being channelled into this organisation with no real results, so it was left to myself, the FSB and FPB to be the grit in the oyster. We managed to persuade the Government then that there should be a small business minister who was Barbara Roach, and subsequently Nigel Griffiths took over who was very effective in his role.”

Danny Lopez , CEO of UKTI, believes it is about simplicity of communication from the

Government. He says:

”I think that the Government does make a very good effort, through a number of organisations and business link services. There is a whole host of information available so its out there, but I think that more could be done to avoid the confusion and sometimes move away from information overload to generate the real information that businesses need. If you give someone 100 pages to read, you know they won’t read a single page if you give them half a page with five bullet points, you know they will read it and its more

about doing something like that.” He also believes that the TPS laws relating to the consumer should not be imposed on a business to business relationship. He says:

“Anything that moves away from that would significantly hinder their business development opportunities. The bottom line is that businesses need to talk to make money; they need to talk because they need to learn from one another, and they need to talk because they create networks. If those three things aren’t happening it will be having a major impact on business, therefore it is a problem.” Phil Orford, CEO of the FPB, agrees with Danny Lopez and says: “I would be very concerned about this potentially very worrying trend of businesses registering on the Corporate Telephone Preference Service. If we were to extrapolate this

out to the end degree, it would mean that I could not speak to other businesses and that is not good for UK PLC! The inability to contact other businesses will stifle innovations, ideas, solutions, and product development, and stifle the UK economy as a whole. If you were registered with the corporate TPS, we could not contact you as and likewise you could not contact us, so if we could not speak to each other, we could not discuss these important issues. In fact we did in effect screen you out in our initial screening process for this discussion, so we can be tuned out from approaches by telephone and your call was useful, so this has made me think. I think there are serious risks to business if they can

not talk on a regular basis and at this stage we won’t realise the effect this could have on the UK economy until it is too late, once it has decreased the whole marketing mechanism, and it will only be then that people realise the impact that this has had.” He believes that organisations such as BERR could do more and goes on to say:

“Organisations such as BERR could help as they have got significant budgets for this type of communication such as advertising. There could probably be more done with Business Link too. I have only been CEO of FPB for six months and we will research more in this area as we have some ignorance in this subject area, and I imagine community leaders and business owners feel the same way.” Rosemary Smith, Chair of the DMA, agrees too, and believes that with the evidence that the DMA holds, the law is disproportionate. She says:



“When the Government brought in the telecommunications telephone preference service legislation which was applied to the general consumer, it was suggested that there should also be a Corporate Telephone Preference Service as the DTI said that there had been complaints from small micro businesses that when working alone for example in a shop, for one person to be taking sales calls meant that it blocked the single phone line and distracted them from serving customers. Now there are 1.3 million business people registered on the database but this actually only represents 70,000 companies, which shows that the main businesses registering are the larger corporations. This is an example of a piece of legislation that is simply not working. BERR is hurting the small micro business, this piece of legislation is not proportionate to the damage that it is doing to these businesses. Currently, the Corporate Telephone Preference Service is the only one

of its kind in Europe. Yes, this piece of legislation is damaging to business and subsequently small businesses are breaking the law, and most don’t even know they are breaking the law. The impact has been that this law prevents businesses from trading freely. It should be about proportionate legislation.” Sir Paul Judge, President of the CIM, thinks that marketing laws and the small business are not going to be a priority for Government. He says:

“It is not going to be a great priority for Government. For example there is an opt out for businesses if you have 20 employees in Europe. We could take advantage of this (Deregulation of Small Businesses). In the UK we Gold Plate the law, which means we use section (2) 2 of the 1972 European Communities Act to add to the EU directives that Ministers think are good things, as the British system is hard to get laws passed through. The 1973 law without debate means that it is easy to get legislation passed through Europe. It would be interesting to see how many of these marketing laws originated in Europe.” In 2003 Sir Paul Judge proposed the European Communities (Deregulation) Bill. Extracts from his proposed bill state that:

Implementation

1. There have been many initiatives over the last decade to try to stem the tide of regulation. However the burden on British business continues and, as set out above, the lack of a Level Playing Field has become even more of an issue.

2. As a result of the lack of success in stemming the amount of legislation, business representatives and trade associations have become cynical about any new initiatives. Thus although they may pay lip-service to any announcements made in this area they will not really believe that there will be a difference unless there is a really new initiative.

3. We need an approach which:

• cuts through the huge body of existing European based regulations

• allows individual businesses a formal opportunity to demonstrate the competitive unfairness of particular regulations

• gives departments a real incentive to avoid “Gold Plating” of European regulations.

4. Unless there is an overriding domestic issue which is substantially different from other member states we should only be implementing European directives to the minimum level required. Any enhancement of their provisions should take its place in the queue for time for Parliamentary legislation as a UK domestic concern.



5. We need a mechanism which ensures that the United Kingdom continues to abide by its obligations under EC law, but which would allow domestic regulations to be

set aside when they added to or went beyond the EC law obligations. 6. The "defence" should be such as to be able to be invoked in civil and administrative proceedings (e.g. when someone could be subject to having a licence taken away for allegedly breaching a regulation) as well as criminal prosecutions. 7. In addition, it should be made possible for businesses and trade associations to take the initiative and apply to the courts for a declaration without waiting to be

prosecuted or proceeded against. 8. Legislation would be proposed whereby a provision of UK domestic law made by

Statutory Instrument under Section 2(2) of the European Communities Act in purported implementation of an EC law obligation could be attacked in the courts if it were shown that:

(a) it contains a provision which is burdensome to an affected person or business or to a class of affected persons or businesses or to persons or businesses generally; and

(b) that provision is not required by Community law, or the relevant requirement of Community law could have been implemented in a less burdensome way; and

(c) in one or more other Member States there is no corresponding provision or the relevant requirement of Community law has been implemented in a less burdensome way;

9. In such a case, the court concerned would have the power to grant a

declaration to that effect and the relevant UK regulation would then cease to have effect to the extent that its provisions go beyond what is required by Community law.

10. Businesses, affected individuals and such bodies as trade associations would be

able to go to court to apply for such a declaration. (The appropriate court to deal with such an application would normally, in England, be the Administrative Court which is part of the High Court). Such a declaration could also be applied for in any proceedings where someone is prosecuted or sued for breach of such a regulation or in administrative proceedings where any such regulation is enforced.

It should be emphasised that this "defence" would not apply in cases where the EC law obligation had been implemented by Act of Parliament. That is because in such cases Parliament itself would have decided what is the appropriate way to implement the EC obligation and may have decided that the balance lies in favour of the more extensive or onerous method of implementation. If that is wrong, it is a matter for Parliament itself to reverse and not for the courts. This proposal is explicitly directed at curbing the inappropriate and far too extensive use of the machinery of section 2(2) by Government departments to by-pass Parliament and to pile on rules and regulations which go beyond what EC law actually requires.19

19 Sir Paul Judge,March 2003 See appendix for full document



Sally Muggeridge, CEO of the IPT, shares her opinions about Gold Plating:

“This brings me onto Gold Plating, which basically the UK has got completely wrong! Brussels makes a good and serious effort when putting a piece of legislation together, then it leaves the European Parliament to go to the different countries – when it arrives in France, the French shrug their shoulders and don’t really bother to implement it, however, when it comes to the UK, it is taken by the Civil Service and used on a regional and local basis and Gold Plated, which means they make significant changes to it, to match what they believe it should be used for. When the legislation is implemented it bears no similarity to the original legislation – then the Civil Servants blame the legislation that they have revised to suit their own interpretation or egotistical need on Brussels, saying

that it is European Legislation.” Lord Cotter, SME spokesperson Liberal Democrats says:

“For eight years I was spokesperson for small businesses in Parliament for the Liberal Democrats. I took up issues in Parliament for the small business and worked closely with the FSB, FPB and Chambers of Commerce. I tended to deal more with red tape legislation and implemented legislation to help save the small business and engaged in other issues

aside from marketing law. Such as areas to do with small business local pharmacies that were needing to compete with the large supermarkets and local public houses, they were really practical issues. I think that the Brussels red tape is a problem in terms of interpretation and the way we have implemented it in this country, for example Chinese restaurants are having difficulty cooking crispy Peking duck because their ovens need to be hotter than the regulation states, although they have been using the same method for 2000 years, they are now having to pay out large sums to buy new ovens in. These type of circumstances may also apply to marketing legislation, whereby there is excessive implementation levels by certain individuals who have been given jobs in this country that most other countries in the EU would not consider being necessary. When I was an MP, I used to find out what was coming down the track from Brussels through the UAPME and would let the necessary businesses within the respective industry know what was coming down the track so they could respond early and so that the right questions could be asked.”

The aims and principles of the Better Regulation Executive appear misaligned to what the current reality and experience of business is, especially in the area of marketing laws.

The Better Regulation Executive (BRE) is part of the Department for Business, Enterprise and Regulatory Reform (BERR) and leads this regulatory reform agenda across Government. Working with and through others, its aims are:

• to work with departments to improve the design of new regulations and how they are communicated;

• to work with departments and regulators to simplify and modernise existing regulations; and

• to work with regulators (including local authorities) and departments to change attitudes and approaches to regulation to become more risk-based.

The department states that:

“Significant progress has been made across all these areas. The Government’s ambitious and wide-ranging regulatory reform agenda is one of the most respected programmes in the world, which has been confirmed by a number of international surveys.”



The BRE five principles of good regulation

A key part of the BRE’s work has been to determine five key principles of regulation, which are now a cornerstone of the better regulation strategy and implementation. These state that any regulation should be:

1. transparent 2. accountable 3. proportionate 4. consistent 5. targeted – only at cases where action is needed

British Businesses spend at least £1.4 billion each year on advice to help them comply with regulation. Businesses will pay for advice if they feel that this is cheaper or easier than following regulations on their own. The Government can make real reductions in how much businesses need to spend on regulatory advice by tackling the five drivers of advice identified in this report, these are:

1. Volume and complexity; 2. Low awareness of Government guidance; 3. Regulatory change; 4. Poor quality Government guidance; and 5. Uncertainty, risk and lack of confidence.

By taking action to reduce the effects of these drivers Government can reduce the

overall costs businesses face in following regulations. Actions delivering even a 5% reduction of the lowest estimate of the size of the market for business advice on regulation would give mean a reduction in business spending of more than £72 million. Even if significant progress is made on tackling the 5 drivers of advice there will still be a role for business advisors in the delivery of regulation. Economies of scale mean it is often more efficient for a single business advisor to gain a detailed understanding of a complex area of regulation and sell this on to businesses than for each businesses to

learn about the regulations for itself. There are areas of regulation where businesses would need less advice if the design and delivery of regulation were improved.

Improving the regulatory process:

• Plan guidance at an early stage of the policy process.

• Issue guidance earlier.

Improving communication on regulation:

• Increase the market penetration of businesslink.gov.uk.

• Communicate directly with businesses using high quality, simple guidance.

• Communicate with businesses through intermediaries. Improving the quality of Government advice on regulation:

• Improve feedback mechanisms on guidance.

• Consider joint-badging or outsourcing the design of guidance. Improving the environment for business advice on regulation:

• Help businesses become informed consumers of advice services by increasing understanding of regulatory requirements. Even with very conservative estimates of the amount spent on regulatory advice, actions with relatively small impacts on the market for business advice could still produce significant savings in absolute terms. The total market for accountancy, legal and employment services in the UK exceeds £23 billion. A reduction of even half of one



percent of such a figure would still reduce costs by more than £100 million. The administrative burdens exercise by the Government estimated the amount spent by business on external services relating to admin burdens to be around £4.2 billion. As

detailed in the rest of the report Government actions are the main drivers for business advice costs so there is considerable scope for Government action to reduce these costs. A 5% reduction of the lowest estimate of the market size for business advice on regulation would save a total of more than £72 million. Reductions of 20% on the upper estimate of the market size would equate to a change of £847 million. Businesses seek external advice on regulations when they think this will cost less than complying on their own. Overall, if businesses perceive that ‘self-compliance’ is cheaper than using business advisors then they will not use advisors. Government has many options

available to reduce the costs of self-compliance – doing so will not only reduce the need for external advice, but more importantly reduce the overall costs of regulation. Evidence from a National Audit Office survey of businesses found that three-quarters of businesses agreed that finding information about which regulations applied to their business was a burden. Awareness of Government sources of information and guidance on regulations varies for different sectors. However, the businesslink.gov.uk website, which is designed to be the main Government web channel for business has a low market penetration of around 6% compared with the 23% of businesses who ask their

accountant for regulatory advice each year. Regulatory change is a major concern and cost for businesses. Research commissioned by the Better Regulation Executive found that change was felt by businesses to be one of the most difficult aspects of regulation to deal with. A fast pace of regulatory change encourages businesses to seek external regulatory advice for two reasons.

Some regulation is inherently complex. The amount and complexity of regulation which

businesses must consider is a key driver behind businesses seeking external advice. Departments and regulators are already working to tackle complexity. Each regulating department now has a Simplification Plan, outlining how it will reduce administrative burdens and simplify existing regulation. Some complexity may be inherent in regulations if they cover a wide range of circumstances or technically complex areas of the economy. In these cases business advisors bring benefits by helping businesses to comply. It is important that the need for high quality advice and guidance is taken into account early in the regulatory process for new regulations. Discussions with a cross

section of Government departments indicate that often the pressure of meeting legislative timescales means that resources are concentrated on the legislative phase of the regulation process including drafting, consultation, and incorporating changes that occur during Parliamentary scrutiny. The development of guidance is often an add-on to the preparation of the regulation rather than an essential component of the delivery of high quality regulation. Once guidance has been published, comparatively few resources are devoted to telling businesses about regulation and the time allowed for communication is often limited. Planning for guidance at an earlier stage would mitigate

many of these problems. Another way in which the regulatory development process could be improved to help reduce uncertainty for business would be to issue guidance well in advance of the implementation date for new legislation. When guidance is issued late it can lead to mounting uncertainty among businesses and increase demand for external advisors to fill the void. Late guidance may also result in precautionary over-compliance where businesses go further than the regulation actually requires as a result of the uncertainty. Current guidelines require that guidance should be issued a minimum of 12 weeks before the regulation comes into force but over the past two years this target has been met for less than half of new regulations. When designing new regulations, policy makers and regulators should consider what guidance is necessary at an early stage and plan this into the policy development process. Considering implementation and guidance at an early stage will lead to better policy making by focusing attention on the practical effects of the regulation.



One way of reducing the cost to business of paying for external advice is to make it easier for them to comply without outside assistance. Few businesses will read the underlying legislation on which regulations are based. It is therefore crucial that

Government provision of guidance makes complying as easy as possible. One of the key principles of the Hampton Report was that regulators should provide authoritative, accessible advice, easily and cheaply. A noticeable difference between many Government sources of guidance and that provided by external business advisors is that the Government guidance is often structured around legislation rather than business processes. This can make it more difficult for businesses to follow guidance for two reasons: firstly, because businesses think in terms of their own processes rather than legislative structures and so may not realise some pieces of regulation apply in

certain circumstances. Secondly, some business processes (for example, hiring new staff) may involve a number of areas of regulation and it can be confusing for businesses to try to bring together different sources of guidance and apply them to the process. For such a model to be successful it is crucial that any direct communication is as brief and user-friendly as possible. It should allow businesses to quickly assess whether a regulation is likely to apply and give links to further information if needed. In order to ensure that guidance is as user-friendly and accessible as possible,

departments and regulators should consider innovative approaches. One option is to produce joint-badged guidance, where a regulator works closely with another organisation which is familiar with producing business-friendly information, such as a trade association, to produce guidance. Joint badging can be a useful tool for improving the quality and usability of guidance. For example, the Environment Agency has worked with Trade Bodies to produce guidance for their members on Hazardous Waste.20

The DMA currently coregulate the TPS and CTPS along with Ofcom and the Government.

20

vURN 07/1273 Regulation and Business advisors, Department for Business, Enterprise & Regulatory Reform, Crown copyright 2007



The Enforcement of Marketing Law and the Cost to UK PLC – The CTPS

Roger Alexander Chairman of law firm Lewis Silkin comments that:

“By and large, the laws are not enforced and data protection is a prime example of this and is rarely enforced. The number of laws and the complexity of the laws make it difficult for businesses to comply and not realistic. The laws have not been framed with the SME in mind and need to be realistic. A one-page information sheet with dos and don’ts should make it easier for SMEs. ” Alexander goes on to say that he does not believe that marketing laws are a cost to business:

“When you look at the general response rates from communication such as email marketing, there is only a 2-3% response rate anyway. So if that were increased to 20% it would not make a huge impact on a business. The response rates have always been low. People have got to be inventive about how they communicate. I spend 15 minutes per day unsubscribing to emails and if the downside of this is that British busineses cannot approach or contact another business, then so be it. All of this is about balance. Data lists

nowadays tend to be of very poor quality and irrelevant material is often sent and received using these lists.” Clive Mishon, Chair of the IPS, disagrees. Mishon says:

“It is costing business a lot. We do everything to ensure that the consumer opts out or opts in, or whatever the case may be. I am in favour of choice and allowing people to communicate and receive information – however I am in favour of personal choice and therefore consumers should have the right to opt out. Government should not legislate in these areas that take away our rights to receive communication or not.” On the question of enforcement, he says:

“It works in places, but for example law on digital communication does not run across borders and therefore it is difficult to ensure general compliance. It is odd that we allow the rogue 5% to govern the other 95% of good marketing citizens!” Ed Weatherall, Chair of the IDM B2B believes that there is no real enforcement in relation to the Data Protection Act. He says: “There is no real enforcement. The Information Commissioner has been given more powers

since the Government lost all those data records, but realistically it is physically impossible for The Information Commissioner to fully enforce the law. Anyway, busy

business recipients of unsolicited mail are much more likely to delete the mail rather than complain as they simply do not have time, its only really those with less time or busybodies that will complain so those operating poor practice are much more likely to get away with it and those operating best practice lose out.” Weatherall goes on to comment on the cost to businesses and the UK economy:

“This is a double edged sword. For people providing legitimate communications it is better that people are doing this right in a targeted manner, but there is no real punishment for those not adhering to the law so we are still all being spammed. At Concep, it has cost us



more to have to train people, so we have been punished financially for doing the right thing. The digital age has confusing laws and there are different interpretations throughout Europe, i.e. if you have an office in London and France you have to adhere to French laws even if you are only targeting the UK! Which makes the law even more confusing and costly to companies.” Lord Cotter questions whether the Impact Assessment and reviews have been carried out correctly in connection with the Data Protection Act, and comments:

“But I have to say, it does seem counter productive and needs to be seriously re-examined and looked at again.”

“This is an area of grave concern to business as it is a block to people to freely market their business and it is impinging upon the liberty of the small business. I would certainly go along with the tenor of what you are saying about freedom of communication within the business community and particularly for the small business. I have to question how often a person working alone in a shop or from home will be bothered by phone calls and how much time that would incur. You have got to be able to run a business in a reasonable manner.”

“In Parliament in 1997 we had the opportunity to use the RIA – Regulatory Impact Assessments and we managed to improve things as Government looked at the bills carefully. One question I would ask in this instance is has the RIA been done properly in this area and I think this is a key point. Institutions should also be looking at legislation coming down the line from Brussels and get Parliamentarianw to ask questions, and if the bill has come through there is still an opportunity to ask questions. There is also an opportunity to review a Bill after a set number of years if the Bill expires, with some Bills there is an opportunity for it to be renewed or get rid of it.” Danny Lopez, CEO, of UKTI believes that laws need to be made only after full consultation with those that the law affects. He says:

“I think like everything in Government, you only get it right when you do it in full consultation and in complete joint partnership with your audience. So, when it comes to

writing marketing laws then it will only get it right when there is a full partnership between the legal input, the marketing input and the regulatory input and of course the business input. So if I think of those four as a square, to me each part has 25% of ownership and say and that is how you eventually get it right, so if that would be the case then the future is bright. If any of those four squared tumble or the percentage changes and one has more than the other then this could be difficult.” He goes on to discuss what impact the CTPS will have on businesses and UK PLC:

“The lack of a conversation, or an opportunity to share or an opportunity to be able to talk about joint business development will always have a negative impact on companies progress and of course will always have an impact on GDP. It is important to put that in the context of what our competitors are doing and I don’t know what marketing law is like in other countries. In the UK we always pride ourselves at being at the crossroads of international business, and we pride ourselves on our history of having started the industrial revolution, having really kicked off what international trade is all about. Our international trade started with the focus on the Thames. It is now just the same about having conversations, so if you are destroying that then you are having a big impact on the economy.” Rosemary Smith, Chair of the DMA, comments on whether marketing laws are an effective deterrent to businesses and says:



“There have been 170 pieces of legislation that affect marketing, all sectors have been affected by across the board legislation such as data protection and there are now lots of laws to adhere to. Some provide for greater deterrents to enforce the law such as the FSA, which has the possibility to enforce huge fines and the law is very detailed. Other areas, such as the telecoms industry, have also come under scrutiny. Call centres were a significant issue a couple of years ago with firms like Kitchens Direct launching 23 million silent calls in two weeks. Ofcom can fine up to £50,000 for infringement. For general misleading content in an advertisement, the Advertising Standards Authority can apply for a court order to prevent the appearance or re-appearance of an ad. The ASA can also make public admonitions, which can cause significant brand damage if the reputation of a company is called into question. The other incident recently, which I now refer to as

‘datagate’ was the HMRC loss of sensitive data records. Since then awareness of the public has risen significantly and the Information Commissioner’s Office has been given more powers, but the process to exercise the powers is still clunky. If an enforcement order is issued, for example, the company in question can appeal and then the case will go to the information tribunal, but by this time the damage has been done.” Smith goes on to discuss the DMA’s code of conduct and their co-regulation with the Government:

“The DMA has a very significant piece of guidance and you don’t have to be a member to access this document. It has really tightened up on the code, in fact the code goes beyond the law, so the self - regulation is almost a higher form of regulation. The importance of this is that it is done by agreement rather than enforcement. Realistically, the Government would not be able to fund regulatory methods that industry can fund and they prefer co-regulation, which involves Government working with industry bodies – for example the regulation of the Telephone Preference Service is governed by Ofcom who awarded the contract to the DMA to monitor and is funded by the DMA subscribers.” Sir Paul Judge, President of the CIM, says:

“Co-Regulation is a good thing as it allows the experts to be involved.” Lord McNally, leader Liberal Democrats House of Lords, talks about the potential review

of the Data Protection Act:

“Although I am not an expert on data protection, I have to say that when you try to do something reasonable yourself it comes as a shock that you can’t have the information you need, or can’t do a certain thing, because of the Data Protection Act. I do wonder whether the Act is sometimes over interpreted and I think that this goes back to the problem of statutory rather than self-regulation. In that people tend to play safe with statutory regulation and are not willing to apply common sense judgements and seem to stick to what seems to be the letter of the law. I would be interested in a concept that has

been discussed called post-legislative scrutiny. This can occur after about ten years when Parliament can look at an Act and see if and how it is working in practice and take evidence, rather like they do with pre legislative scrutiny, and see if it needs changing. I think that the Data Protection Act might be one worth looking at, just to see if the desire to protect data doesn’t impede quite legitimate exchanges of communications between businesses and between individuals. The whole problem here is the shadow of the big brother society hanging over us. I mean, how much information is held? And how is it used? Some of this can sound quite sinister that the marketer with the data can, at a flick of a switch, identify a single individual in a row of houses who might be susceptible to approach. On the other hand if the collection of data allows the marketer to hone in on those who are most likely to want or desire the product, that is not sinister – it’s the way you look at it…”

McNally goes on to say:



“I think there is always a danger, particularly in this place (Parliament) in thinking that you pass a law about it and that fixes it! You hear the Government has passed Home Office Bill each year dealing with various aspects of law and order and counter terrorism, and some of these laws have never been implemented. It’s always been a temptation to think that the statute will solve all, but in the real world, it’s not always the case. I am not well enough informed about the enforcement around data protection, certainly The Information Commissioner has the support of Parliament. The task is still to get the balance right between Government and data protection and not gumming up the whole natural flow of information within society and it is a genuine dilemma, because technology is so awesome these days. There is an amazing amount of technology out there that could be intrusive. There is a case to be made to see if the Act is working, but of

course you need to be aware that, if you have that review, there will be just as many groups leaping in arguing for the tightening and strengthening of the Act and tougher regulation.”

McNally believes that the law surrounding data protection should be reviewed:

“Take a deep breath. The select committee investigate post legislative scrutiny and take a look at where we have go to or have we gone to far. It is a fast moving world and legislation, which may seem sensible at the beginning, may not be the same today. Perhaps we need to look at other areas, as free markets create innovation. McNally goes

on to discuss his experience in Government over the years. “The battle all the time has been to keep pace with changes in technology and on the marketing itself, so that you've got the balance right between giving the businesses the freedom to operate whilst protecting privacy. One of the first interventions I made in this place (Parliament), which got some coverage, was when we had a hostile question about junk mail and I intervened to say, ‘what’s the problem? If you don’t want the mail then junk it by all means but personally I find junk mail useful!’ Some people must have thought that I was a strange individual for liking junk mail. It is very critical to get the balance right between people who say they don’t want direct mail by email or post but if we had blanket laws it would cut off a whole range of perfectly legitimate businesses. So it’s how you get the balance right between common sense and preventing people from being bothered by unsolicited approaches. During my 40 or more years in Parliament the balance has always been between the pressure for business to use new techniques and technologies, and consumer groups wanting to protect the consumer from unwanted approaches, and I am not sure that there is an easy answer to that. On one hand there is perfectly legitimate

direct marketing, on the other hand we can get a whole range of messages such as those that are common from Nigeria, offering £5million in return for £500 and of course there is the Viagra too! It is a continual balance between protecting the consumer and on the other hand giving the direct marketing legitimate space to carry on their business.”

Those in the marketing profession will generally be aware that the Information Commissioner only tends to intervene when multiple complaints are made about an unsolicited communication, this will involve usually around 10 complaints against the

same company or organisation by a consumer as opposed to a business. A company or organisation may make contact for the purpose of market research only. However, if the communication is deemed to have a sales or marketing purpose, the ICO may intervene.

It was reported on the BBC news that, on 17th September 2008, Liberal Democrats sent out a telephone marketing research questionairre to 250k homes by automated telephone calls, alledgedly ignoring the requirment of TPS. Richard Thomas, The Information Commisssioner intervened, requesting sight of the script. Meanwhile, the Liberal Democrats Conference was underway and those responsible for the campaign were busy at the conference.

On 2nd January 2008 Osborne Clarke reported that, in the wake of the much publicised loss of personal data by HM Revenue and Customs in October 2007, the



Government had launched a review of the law in respect of the sharing of personal data. Much has been written about the circumstances surrounding the loss of the two CDs and this article will not endeavour to cover this well-worn ground. However, it

does seem unusual that the security breach was, according to Gordon Brown, a result of, "not following proper procedures", yet this procedural failure has led to, essentially, a review of the legal framework. It is difficult to see how one will prevent the other but that appears to be where we find ourselves.

The review will cover both the public and private sectors and focus primarily on the sharing of data. The scope of the review in this regard will not come as any surprise. The review will deal with such questions as proportionality in the case of personal data sharing and the balance between, on the one hand, allowing data sharing to enhance public services or reduce the burden on business and, on the other, ensuring that information is used for the purpose for which it is collected.

However, there are other areas within the scope of the review that do not appear to naturally flow from the data loss incident in October. The review will include recommendations on the powers and sanctions available to the ICO and the courts. Given that the Information Commissioner, who has long lobbied for increased powers of enforcement, will be the co-author, it seems almost inevitable that the report will recommend that these powers and sanctions will be increased.

Within the context of the second principle of the Data Protection Act (DPA), the consultation paper asks, at question 12, "What further powers, safeguards, sanctions or provisions do you believe should be included in the DPA?". Given the long standing criticism of the maximum £5,000 fine for breach of the DPA, particularly when compared to the kind of fines that the Financial Services Authority can impose for the loss of personal data, sanctions are the obvious place for the Government to start.

It also seems likely that there will be a push for greater powers of audit for the ICO.

Gordon Brown has stated that he wants the ICO to have the power to audit any public body's information policy with or without their consent. It is difficult to envisage such a provision applying to public bodies but not private ones. In fact, such a distinction would surely be seen as an admission by Government that data is less safe in their hands than in those of the private sector.

A failure by an individual within a public body to follow correct procedure should logically lead to a tightening of controls and procedures within that body. However, legislative review and change is often seen as the best form of (or, arguably, the best replacement for) action in the wake of a very public failure. Given the scope of the review and a probable reluctance in Government to put public bodies under stricter

duties and obligations than the private sector, it seems likely that the net result of this saga will be stiffer penalties for breach of the DPA and greater powers of audit for the ICO. There will probably be further changes to the regulatory regime but they are less predictable until the results of the consultation are published.21 The Lords' key recommendations are, firstly, the strengthening and enforcement of the Act by increasing resources at the ICO, introducing random audits of security measures and substantially increasing penalties for breach (para. 5.57). The Committee seems

particularly concerned about the penalties, comparing the £5,000 maximum fine under the Act with a £980,000 fine imposed on the Nationwide Building Society in February 2007 for the loss of a laptop containing confidential information (para. 5.50). Secondly, the Committee recommends the introduction of a data security breach notification law, similar to that in force in the United States, that would compel Data Controllers to send notification letters to individuals stating the nature of the breach and providing advice on the steps individuals should take to deal with it (para 5.55).

21 Osborne Clarke January 2008. Coyle. R



Perhaps more worrying is the overall tone of the report. The Committee clearly believes that urgent action is needed, particularly in respect of privacy on the Internet which was described in the report as both a "playground for criminals" and "a lawless wild

west".

At the other end of the spectrum is the Conservative Party. Their August 2007 report, "Freeing Britain to Compete: Equipping the UK for Globalisation,” approaches the issue of data protection legislation and enforcement from an entirely different perspective. The Economic Competitiveness Policy Group describes the Act as an "expensive bureaucracy", and recommends its repeal (para 6.10). The report cites figures from the British Chamber of Commerce (BCC) estimating the cost of

compliance at £2.3 billion per annum (although this figure is the subject of much dispute) and recommends that significant cost saving could be made through governing data protection through the law of privacy and established codes of conduct rather than specific legislation. The authors of the report seem unfazed by the fact that the Act implements EU law and repeal would be problematic to say the least. Research by OPT-4 in 2007 revealed that, the Information Commissioner has had little or no visible impact in enforcing data protection law. Time and time again the

respondents had said they had seen no evidence of this office’s activity whatsoever. One said the Information Commissioner has 'completely dropped off the radar'. They had read there would be some high profile investigative cases and prosecutions but had heard of nothing. If any further notices say investigations will be stepped up, they feel there is a strong danger that 'cry wolf' has been heard too many times before. Furthermore, many also felt it was unlikely that their company would come under any scrutiny – with more ‘rogue operators’ being targeted long before they would be

considered. One financial company said that whilst they would not want the Information Commissioner knocking on their door, they feel the threat is far less daunting than the 'nuclear weapon', as they described it, posed by the FSA. They believed any fine would be very minor compared to that often charged by the FSA. A common feeling was that the legislation had largely been the result of the industry

not self regulating itself adequately and the mass direct marketing activities adopted by some organisations were tarnishing direct marketing for everyone else. One described it as, “The few spoiling it for the many.” Some of the financial companies had had some dealing with the Information Commissioner but they have been always been due to an individual complaint being made - not an overall investigation into general company policy and procedures. When companies have had dealings with the Information Commissioner, the regulatory body

have usually been cooperative and understanding. Only two respondents had used the Information Commissioner’s helpline. One said it had been very helpful but the other said they had received contradictory advice, ‘which has not really helped on a practical level’. In terms of advice on likely enforcement, The Direct Marketing Association was regularly mentioned as a useful reference point and one respondent had been pleased with information received from The Committee of Advertising Practice. It seems companies are very keen to follow 'best practice' but struggle sometimes to know what this actually is.

The latest report from the Commissioner's Office highlights that the ICO received almost 24,000 enquiries and complaints concerning personal information in 2006/07.



Just over 10% of these were about Direct Marketing. ICO research now estimates that 82% of individuals are aware of their rights under the Act.22

The Data Protection Directive 95/94EC (Regulatory Appraisal and Compliance Cost Assessment document) states that,its purpose is:

• to harmonise data protection legislation throughout the EU;

• to protect individuals' rights and freedoms, and in particular their right to privacy with regard to the processing of personal data;

• to facilitate the free flow of personal data within the EU in the interests of improving the operation of the single market.

The report states costs to the economy at the time, as follows (full report in Appendix):

The legislation will affect all sectors of the economy. Total costs for the economy have been calculated at £1,150m in start-up costs and £742m in recurring annual costs. Costs will fall on businesses of all sizes throughout the private sector. The compliance

cost assessment shows that the measure is unlikely to have a significant impact on small businesses. There may be cost implications for some organisations within the voluntary sector. Both central and local Government will be affected. The compliance cost exercise of August 1997 included a sample of Government departments and other bodies. Implementation will be phased in over three years from 24 October 1998, with a further six years for some provisions in respect of manual data. Start-up costs will not

therefore all fall within one year.

Enforcement, sanctions, monitoring and review The application of the new law will be monitored and enforced in the UK by the Data Protection Commissioner (formerly the Data Protection Registrar). The enforcement regime will broadly be based on the one which currently applies (ie a mixture of criminal offences and enforcement notices). There will be some stronger powers for the

Commissioner. Under current law only registered data users can be subject to enforcement for breach of the principles. In the future the principles will apply equally to all data controllers whether they notify their processing operations or not. Under the Directive, law and practice in Member States will be monitored by a Working Party of Supervisory Authorities of the Member States. A Committee of Government representatives and the European Commission will have a limited role in enforcement in respect of data exports to third countries.. Total compliance costs for the economy are estimated at £1,150m in start-up costs and £742m in recurring costs. A breakdown by different sectors is given in the Annex. It should be noted that a three year transitional period is allowed after 24 October

1998 for compliance with the Directive in respect of existing processing, with a further six years for some provisions relating to manual data. The start-up costs are therefore unlikely to all arise in one financial year.

22 ICO Annual Report 2007



Impact on small businesses

A sample of small businesses were consulted at every stage of the Compliance Cost Assessment. These included retailing, services and manufacturing organisations. The consultation showed that the impact on small businesses was not likely to be significant. In particular many small businesses would not be required to notify their processing operations to the Data Protection Commissioner. The report also states costs to businesses. These have been estimated at £630m p.a. recurring and £836m non-recurring. This compares with costs identified to business

from the questionnaires of £45.1m p.a. recurring and £58.6m non-recurring. Five business sectors have been identified separately as likely to experience significant cost pressures. These are ; (a) manufacturing by large firms; (b) manufacturing by small firms; (c) financial service organisations dealing with individuals; (d) large organisations such as utilities, transport companies and large retailers which

go in for "active marketing" as well as direct marketing firms, and (e) retail newsagents. The largest component of costs to business appears likely to fall on (d) with an estimated recurring cost of £302m p.a. and a non-recurring cost of £451m, both arising from contacts with customers, i.e. through the Directive's requirements to give information to data subjects and to grant subject access. This estimate needs to be

regarded with particular caution because of the low response rate from utilities, to offset which the total reported for them was inflated by a factor of ten. Costs to financial service providers have been estimated at £149m p.a. recurring and £ 132m non-recurring. These too would arise from their contacts with customers. A similar but less powerful caution applies to these numbers as to those in the preceding paragraph. Costs to small manufacturers arise from their relationship with employees. They have been estimated at £122m p.a. recurring and £153m non-recurring. Recurring costs to retail newsagents appear to be small (£140,000 p.a.). However, non-recurring costs

have been estimated at £11m. Recurring costs to large manufacturers appear to be small (£320,000 p.a.). However non-recurring costs have been estimated at £12m.

It has been assumed that costs to other sectors will amount to 10% of the combined total for the five sectors identified separately. This reflects professional judgement necessary because firms in a number of sectors did not respond to repeated requests for information. This may reflect perceptions that the costs of the Directive to them are not significant. This calculation yielded the grand total for costs to business of £630m p.a. recurring and £836m non-recurring.23 For the full report see appendix.

8th May 2008 Osborne Clarke reported that, the long-awaited (and much debated) Criminal Justice and Immigration Bill (the Bill) finally received Royal Assent on 8 May this year, promoting it to the status of the Criminal Justice and Immigration Act 2008 (the Act).

The Bill had been a hot topic in data protection circles because early drafts had proposed the introduction of a new criminal offence for data controllers who knowingly or recklessly disclose personal data in breach of data protection law. However, these proposals were dropped at later readings, following extensive lobbying by, amongst

23 Home Office December 1997



others, the media industry who, expressed concerns about the proposal's impact on journalistic freedom and freedom of speech.

The end result is that, whilst increased enforcement powers have found their way into the Act, they have done so only in greatly watered-down form. Rather than introducing a criminal offence of knowingly or recklessly disclosing personal data, the Act simply gives ICO the power to impose a "monetary penalty" on data controllers who fail to

comply with the data protection principles set out in Schedule 1 to the Data Protection Act 1998. This sounds harsh in principle, but its effectiveness is significantly limited by the facts that:

• ICO can only impose the penalty where the breach was of a kind likely to cause substantial damage or substantial distress; and

• ICO can only pursue a data controller if it: (i) deliberately committed the breach; or (ii) knew or ought to have known about the breach, that it would cause substantial damage or substantial distress and failed to take steps to prevent it.

These limitations will greatly limit ICO's powers to pursue misbehaving data controllers by subjecting it to an evidential burden that may, in practice, provide difficult to overcome. Further, whilst ICO can determine the level of the monetary penalty it wishes to impose, the penalty must not exceed a "prescribed amount" to be set out in future regulations; ICO will therefore not have the ability to impose unlimited fines. The level at which this prescribed amount is set will clearly be crucial - setting the threshold too low may simply lead to disreputable data controllers accepting commercial risk and continuing to knowingly or recklessly breach data protection law; setting it too high may serve as a deterrent to establishing data processing operations in the UK. ICO's power to impose fines will come into force at a date to be specified. Notwithstanding the manner in which the original proposals were watered down, the new power to impose fines afforded to ICO does give it the ability in certain cases to

take quicker, more direct enforcement action against non-compliant data controllers. Advertisers and marketing agencies run the risk of incurring ICO's wrath if they do not undertake their marketing campaigns in a data protection compliant way (e.g. collecting all necessary consents, making proper disclosures, respecting opt outs etc.). This risk will be relatively easy to manage for those targeting their own customer lists. However, the risk of ICO enforcement may be greater under these new measures when buying-in third party list rental data. Advertisers who do not exercise proper due

diligence over list rental data could be exposed to risk if marketing rights do not exist in the data they have acquired. Appropriate due diligence measures might include, for example, only purchasing data from a reputable supplier, checking that the supplier has proper legal authority (e.g. consents) to supply the data, and cleansing the data against preference service suppression lists etc. Without performing this due diligence, it could be said that the advertiser or marketing agency "ought to have known" of its data protection breaches - exposing it to a possible fine from the Information Commissioner. That said, the nature of the diluted powers given to ICO means that although there can be no certainties here, it will probably focus its energies on significant, high profile data protection breaches where there is little doubt as to whether "substantial" harm has been caused. ICO is unlikely to want to commit resource or money to pursuing jn data protection breaches where there is a risk that any fine it imposes could be subject to challenge and, possibly, overturned.24

24 Osbourne Clarke May 2008, Lee. P



The Importance of Lobbying Clive Mishon, Chair of the ISP, thinks that Lobbying is:

“Very important! We have suffered as we have to compete with much bigger and better organised organisations that lobby against us. We use the Advertising Association (AA) to help lobby for us. The advertising industry gets hit very hard and blamed for a lot of things to do with our health such as advertising certain foods to children as it is made out that advertising and promotions are at the root cause of obesity. Of course these special interest groups do not take into account how peoples lifestyles have changed. In

fact, we have the same calorie intake today as we did decades ago when there was not so much obesity. However, our lifestyles have changed such that we are not burning off those calories as we did years ago – as playing fields are turned into flats and competitive sport is frowned upon (except amongst the elite). These facts are often difficult to put across and substantiate effectively. They like to create a headline piece of legislation and the advertising industry is the first to be blamed. We should remember that the creative industry is extensive in the UK and contributes significantly to UK PLC

and if it gets hit hard, we all suffer.” Sally Muggeridge CEO of the IPT, talks about her experience with the IPT:

“We usually get involved in proposed legislation only to the extent of trying to make MPs better understand the possible impact and ramifications of proposals. Usually proposed changes in the law start with a perceived problem, generally alerted by the media, for example ‘junk mail’. MPs then think it is a problem that needs to be halted or controlled,

so they draft legislation against it. The problem is that they legislate against a minority who are doing things badly and instead affect the majority who are doing things well and also pay somewhat better heed to the laws of the land. Laws tend to be reactive. It often starts with an MP’s constituents getting up in arms about something, inducing the MP to get up in arms, and then the whole of Parliament gets up in arms. Unfortunately what happens in practice is that in the process, not all the real issues and consequences are thought right through and we therefore get laws that are fundamentally flawed – a classic example of over-hasty reactive legislation would be the Dangerous Dogs Act.”

Sally goes on to comment on her experience with marketers and lobbying: “The problem here is the corporate affairs people or Government affairs people. I certainly have never had a marketer talk to me about the impact of marketing law – the only time I have ever been contacted by a marketing person ever, was a product marketing person. I certainly do not think that marketers lobby in the slightest and the problems companies face implementing legislation are massive. When there are revisions or changes to the legislation, either because of lobbying groups or because the law has not been that clear, the companies face huge costs in meeting their obligations of compliance. Take, for example food labelling- there is so much food labelling now that we cant even read it because there is so much of it! This is a huge cost to businesses every time they need to make changes. Marks and Spencer spend millions meeting their obligations such as now having to put all the labelling in multiple languages. As food businesses say, we don’t mind being told what to put on the packaging, but we need some consideration and

consistency in how we do it – meaning that the cost to make changes that are not



originally well thought through by legislation and lobbyists are costing the food industry a fortune, which will only end up being passed onto the consumer. There is now even talk of every bottle of wine to be labelled that the item contains alcohol, stating that alcohol may impair your judgement – as if we don’t know that. It is getting ridiculous. Often it is about MPs making an impact and putting their name against something so that they are known for a specific point of legislation. For example, Gordon Brown’s fiscal policy for Great Britain – Gordon Brown wants to be known for being prudent in this policy. Tessa Jowell wants to be famed for her Olympic policy, which most probably will backfire, as the logo is made so difficult to use and the laws surrounding the Olympics are so strict, in fact, too strict and not beneficial for the Olympic brand. MPs can make up their own specific laws relating to a significant project such as the Olympics and we have little or no

say in the matter.” Danny Lopez, CEO of UKTI comments on lobbying. He says: “Lobbying is needed in the area of marketing law, particularly the CTPS, but in my opinion it does not work when you have got too many bodies doing it. It needs one body representing different marketing disciplines.”

To date, the Forum of Private Business have not lobbied on the subject of marketing law and the CTPS. CEO, Phil Orford comments:

“We have not done anything to date, although it is something that we will be looking at in the future. Anything that affects the small business is of interest to the FPB and myself and therefore worth discussing. There is a degree of ignorance on this issue of marketing laws as there is very little information available to us. If laws affecting the ability of small businesses to communicate worsen significantly, then we would consider it time to act.” He believes that the FPB could lobby on this subject and says:

“Yes, absolutely! We could lobby. Our aim is to understand this area better so that we can fully relate to the constraints that are being placed on business. The FPB are very interested to be involved in this area and lobby in the interest of our members to allow them to communicate freely, and at the same time to help with members not getting

inundated with irrelevant marketing communications.” When asked about whose responsibility marketing law was, the lawyer or the marketer, Sir Paul Judge, President of the CIM said:

“It is the responsibility of Parliament, who need to balance the requirements of the marketing profession and businesses as a whole. The marketer should play a part in lobbying.” Judge thinks that lobbying on matters of marketing law is very important. He says:

“It is very important. For example, the ASA lobbies strongly in areas such as children’s advertising and the DMA lobby strongly in the area of data protection.” Judge goes on to comment:

“We are a law-abiding nation and accept law and can lobby to change the law. MPs vote as they are told, they go through standing committees, which is like a mini House of Commons which they put together for each Bill. Scrutiny is minimal. Parliament does not deal with the details on legislation and when people are lobbying, they need to lobby the departments not the MPs. Trade associations in the UK are not good at lobbying, they are weak at lobbying at the European level. Lobbying in Brussels is the key and trade associations in the UK are much weaker than in Europe. We tend not to lobby well in

Europe.”



Richard Payne-Gill of data suppliers LBM, believes that their company is too small to lobby parliament and says:

“Although LBM has a large number of staff, I think we are too small to lobby directly. Institutes lobby directly but I don’t think that the issues are grave enough for us yet to get together with competitors and lobby.” It appears that large data houses such as LBM are simply taking legislation on the chin rather than fighting the tide of change.

Kolah A. writes in his book Essential Law for Marketers, Chapter 14 page 317, “The

right to lobby or to ‘petition for redress of grievance’ (to use the language of the Magna Carta) has long been established in Anglo – Saxon democracies.” Lobbying is as old as Britain’s Parliamentary democracy and in fact the House of Commons was itself established as a lobby aimed at influencing the King. As power shifted to elected representatives of the people, Westminster and Whitehall became the target for those with grievances and this has eventually evolved into the modern day

process of lobbying. The freedom to lobby those with power is a defining feature that distinguishes between democracies and totalitarian societies. The key to lobbying is to understand the legislative process and how those of the UK and the different national assemblies operate within the European Union. Companies and organisations have the right to take advice on how best to put a case forward to Government and statutory bodies.

Concerns have arisen not over the right to lobby itself but rather over how that lobbying is done, and in particular over the issue of financial communications between businesses and MPs and officials of public bodies. There is no standard definition of lobbying, but two useful definitions are:

• Any action designed to influence the actions of the institutions of Governments. alternatively;

• The management skill that internalises the effects of the environment in which an organisation operates, and externalises actions to influence that environment.

Government, both centrally and locally and through a large number of agencies and

other public bodies in the UK and in Brussels, makes thousands of decisions every day on policy, legislation and regulation. Organisations need to deal with the system either because they have a specific concern – a need to make representations on a policy, Bill or commercial decision or because they want to inform legislators and officials before the need to lobby may arise. Lobbyists exist to facilitate this process.25 The first appearance of lobby, meaning roughly 'an entrance hall' is (of course) in Shakespeare: "How in our voiding lobby hast thou stood and duly waited for my coming forth?" (Henry VI, Part II; Shakespeare using "voiding lobby" here to mean a lobby that people pass through as they void or leave a room). The very first use came earlier in the sixteenth century and appears to refer to some sort of cloister in a monastery; there's only one example and it's not very clear. The word is borrowed from the medieval Latin lobia, which meant 'a covered way', and is related to the

English word lodge.

25 Kolah. A. Essential Law for Marketers, Chapter 14 page 317 , Page 321- 322



The word developed a more specific sense in the seventeenth century, when it was used to refer to one of the anterooms of the House of Commons; in one of these

anterooms, the public could meet with the members of Parliament and talk with them. This specific sense was itself generalised to mean the anteroom of any legislative assembly. The verb "to lobby" arose in the early nineteenth century to mean 'to visit a lobby in order to influence members', and that's where we get the political use. The word “lobbyist” developed later in the nineteenth century from this verb. Both the verbal use and the word "lobbyist" were American developments.

Anyone can write to their own Member of Parliament to say what they think about an issue or a bill and this may help the MP to decide what to do. However, a MP may receive letters from lots of constituents with no clear common view. In deciding how to vote on an issue a MP will also take into account their party’s policy and use their own judgement. Other forms of lobbying include organising demonstrations or signing petitions. There

are many pressure groups who will lobby Parliament on issues in which they are interested. Unlike political parties, which will have a policy on each major issue, pressure groups will tend to focus on one particular issue such as transport, the environment or human rights. For example, a cancer charity would lobby Parliament about health policy or a bank would lobby Parliament about economic policy.

In order to remain in power, the Prime Minister and his or her Government must be able to get support for their main policies from the House of Commons. This includes getting their proposed new laws (Bills) approved, and deciding on foreign policy.

At the moment, because the Labour Party does not have a large majority in the House of Commons (only 66 in 2009), the views of every single MP are vital in determining whether or not the Government can successfully pass a certain policy.

This means that if an MP is encouraged to take a certain position on an issue by their constituents, they are in a good position to challenge the Government's stance.

The Sunday Times, 25th January 2009, reported that Labour Lords change laws for cash:

Labour peers are prepared to accept fees of up to £120,000 a year to amend laws in

the House of Lords on behalf of business clients, a Sunday Times investigation has found.

Four peers — including two former ministers — offered to help undercover reporters posing as lobbyists obtain an amendment in return for cash.

The disclosure that peers are “for hire” to help change legislation confirms persistent rumours in Westminster that lobbyists are targeting the Lords rather than the Commons, where MPs are under greater scrutiny.

Brendan Keith, the registrar of Lords’ interests, said on Friday that taking a fee to help amend bills was a breach of the “no paid advocacy” rules which prevent peers from promoting the cause of a paid client in parliament. “The rules say that a member of the

House must never accept any financial inducement as an incentive or reward for exerting parliamentary influence,” he said.

Baroness Royall of Blaisdon, leader of the House of Lords, issued a statement yesterday saying: “I am deeply concerned about these allegations. I have spoken to the members

who are the subject of them and I shall be pursuing these matters with the utmost vigour." Norman Baker, the Liberal Democrat MP, said he would take up the issue with the Lords authorities. “Legislators in the Commons and the Lords are there to pass



legislation on behalf of the country, not to change the law in return for financial favours,” he said.

The Sunday Times began its investigation last year after Lord Taylor had been forced to apologise for asking a question in the House on behalf of a paying client without declaring an interest. His friend Jack Straw, the justice minister, was reprimanded last

week over an undeclared donation, which had been arranged by the peer.26

Lobbying is an essential part of a democratic society and therefore the rights of individuals and groups to be able to lobby fairly without the need for a full purse is paramount.

26 The Sunday Times, 25th January 2009



Conclusion It is clear from the research that the marketing profession need to take more responsibility for marketing laws, both within their job role as marketers and to expand their knowledge of this subject area to protect the future of marketing communications and the marketing profession. The marketer needs to sit up and take notice of the opportunities and threats within a SWOT analysis of their own profession and realise that marketing laws are a real threat to the marketing profession if they continue to gain the ground they have done in recent times. However, this threat can be turned into

a real opportunity for the profession if marketers take the lead and carve themselves out some niche opportunities to fly the flag for the marketing law profession. Lawyers and law firms who now specialise in the area of marketing law, are seeing this area as an opportunity to make a lot of money and establishing the lead over the marketers, whilst the marketers see it as a restriction placed upon their job and shirking their marketing responsibilities. Until marketers take control, it is likely that more legislation will appear in the UK and more opportunities will exist for the Government to Gold Plate

the legislation and more opportunities will exist for the lawyers too. Research has shown alarmingly significant low awareness amongst both the marketing profession and general business managers and business owners alike. Both marketers and SME owners need to make themselves more aware of laws relating to marketing. There is a need to include marketing law within the standard business school curriculum and even in business education within schools. There is also a need for stand-alone modules to be included in the marketing courses and diplomas that are

certified and recognised by the CIM, IDM and ISP. In terms of the SME, there needs to be simple guides available both on and offline to enable the business owner to produce compliant marketing campaigns with ease. The information needs to be proactively available and produced both at an independent and joint Government departmental level to ensure best possible level of awareness. A guide in layman’s terms would help the marketing industry and small businesses to be more aware of marketing laws, something like a basic handbook would be a low cost option. Maybe Government should produce some regional marketing law road shows in conjunction with local marketing

firms to assist with awareness for the SME. There are a handful of courses available at the moment, which have appeared over the past 12 months, however, they are very expensive and more so for the practitioner. So for the SME, spending a whole day out of the office along with the cost of the course can be very costly exercise for their business. With laws constantly being revised, they would have to repeat this on a regular basis. Trade bodies are another option, but small businesses have to pay to be a member and they may think that their funds may be better spent on their proactive marketing communications activities such as creating a new website. It is also important to recognise, that there needs to be information available to take into account parallel disciplines as marketing law crosses into many areas and the impact of a campaign on other areas of the business needs to be well understood. Businesses need to understand what relationship promotional law has with other areas of business law too. Information about general marketing laws needs to be publicised better, laws such as the CTPS, were not well publicised and many marketers and businesses were caught out, even some experienced telemarketing companies were caught out. There needs to

be simplicity of message, clarity, and ease. The right to freedom of communication between businesses needs to be championed and supported at the highest level by the marketing profession. Businesses who have opted into the CTPS, TPS and FPS need to be made better aware of the medium and long term repercussions of their actions. A well-designed marketing campaign would be useful to aid a more balanced approach to the decision making process by a business as to whether to opt in or not. Companies need to be aware that that because of the way



the CTPS is policed, an unauthorised person in or outside their business can opt the business into the CTPS. This means that a competitor, or a receptionist can opt the business into CTPS. Companies need to be aware of this and ensure that marketing law

is included in their marketing plan and strategic decisions, rather than leaving the marketing door open to others who may rob their business of opportunities. Companies will always need to buy goods and services from each other and re negotiate with new suppliers. Businesses are going to need to use far more targeted methods of marketing and to explore all areas of the marketing mix before committing to the promotional decision. Marketers need to be proactive with their colleagues in other businesses and campaign more for the rights of freedom of communication between their respective businesses. Unless marketers and businesses are careful in future about the decisions

they make, we are in danger of fossilising communications particularly in business-to-business communications. There needs to be a review of what effects marketing laws are having on SME’s in particular the micro and small business. As European law allows, businesses employing 1- 20 persons, should be exempt from red tape. There has always been a much greater impact on the SME, because in a larger business you have more resource in terms of people and finance and far more syndication of blame, which essentially means you do

a bit of work and pass it on to someone else, who in turn passes in on to someone else and you all have input - it’s a bit like insuring the work. In an SME you don’t have that and the buck stops with one or two people and if they can’t solve the problem, then the problem can have a huge impact on the company. So, based on that, far more of an effort needs to be spent on SMEs as potentially it can have far greater impact on two things; one is their bottom line, and two is their top line, including their brand, culture and effectiveness. One way of reducing the cost to business of paying for external advice

is to make it easier for them to comply without outside assistance. Few businesses will read the underlying legislation on which regulations are based. It is therefore crucial that Government provision of guidance makes complying as easy as possible. One of the key principles of the Hampton Report was that regulators should provide authoritative, accessible advice, easily and cheaply. Marketers need to form a coherent group to lobby effectively against both Brussels and parliament and keep abreast of the laws that affect their profession, they should keep in

mind at all times the laypersons view and that of the SME, whose needs are greater than the large business and therefore consideration needs to be given to the ability for SMEs to understand, and be able to implement any marketing laws in terms of time and budgets. At all times the marketer needs to balance the need for consumer protection and the need for businesses to communicate freely between each other. Companies and institutions have a responsibility and an obligation to market themselves when legislation is proposed and should push through for MPs to understand the challenges they face in their businesses. Furthermore, businesses

should always have a relationship with their MP, as they never know when they will need that MP to help them. Having a good relationship with their MP means that the MP can have a good understanding of the business issues they and their business community face. Therefore the MP can be well briefed on supporting these matters in Parliament. Regulations in the UK are very burdensome for businesses and the fact is that in general, UK businesses are extremely diligent in terms of the way that they approach and comply with these regulations. The CTPS needs to be reviewed under scrutiny by Parliament. It is a disproportionate law, which has no place in the business-to-business marketing and will only deprive UK PLC of much needed revenue and profits. It is very damaging to the SME in particular and should be outlawed as opposed to being reformed. Businesses exist to do business in the business community and for most this is their sole purpose, if they are not allowed to communicate with each other freely, the whole purpose of the business community ceases to exist. If CTPS registrations continue at the current rate of 130 per

cent per year and the Companies House figure of 1.8 million limited companies in total



in the UK is accurate, then the entire business audience will be barred from telemarketing to each other within six years. In July 31st the number of lines registered stood at 1.3 million from around 60,000 companies. Proving that larger businesses are

registering. At this rate, we will not experience the effect on the UK economy before it is too late. Unfortunately, on 20th November 2008 Mike Lordan, Director of Consumer Services at the DMA reported that the DMA had submitted a document to BERR a few months ago and a follow up meeting was held in November 2008, whereby the DMA have been asked to submit more information; however, their belief is that BERR consider that improvement or even reform of the CTPS to be a low priority and currently, it is not part of the legislative calendar. However, one senior Parliamentarian interviewed thinks that the CTPS needs to be looked at and is worried that unless all

are careful we are going to fossilise communications, particularly business-to-business communications. Government needs to consult a wider industry audience and marketers on the subject of marketing laws and really understand the consequences through accurate and well-informed Regulatory Impact Assessments. Building of scenarios and the real impact of marketing laws on business just seems to be missing and laws seem to be passed and Gold Plated on a whim.

There needs to be more effort made by Government to communicate with businesses and businesses to communicate better with Government. Companies do not seem to know what they should or should not be doing and therefore means that they do not have access to the right information, which means that somebody is not feeding the information down. In many cases, they do not know whom they should be accessing in Government to obtain information. The problem is that they legislate for the minority

who are doing things badly, instead of the majority who are doing things well. Therefore laws tend to be reactive. It normally starts with an MP’s constituents getting up in arms about something, then the MP’s get up in arms, then Parliament gets up in arms. Unfortunately what happens is that in the process, not all the real issues and consequences are thought through and we get laws that are fundamentally flawed. There is an opt-out for businesses if you have 20 employees in Europe. We could take advantage of this (Deregulation of Small Businesses) European Communities Act. In the UK we Gold Plate the law, which means we use section (2) 2 of the 1972 European

Communities Act to add to the EU directives that Ministers think are good things, as the British system is hard to get laws passed through. Brussels makes a good effort when putting a piece of legislation together. Then the legislation leaves the European Parliament to be implemented by the different European countries. When new legislation arrives in the UK, it is taken by the Civil Service and used on a regional and local basis, where it is often Gold Plated, which means they make significant changes to it, to match what they believe the legislation should be

used for. When the legislation is implemented it often bears little or no resemblance to the original legislation – then the Civil Servants blame the legislation, that they have revised to suit their own interpretation on the fact that legislation is made in Brussels, blaming the ‘European Legislation’. Marketers need to be seen more in the Brussels arena and be aware of what laws are being proposed and work out the best method to defend their profession in an organised and coherent manner. If Government think that advertising and promotion are such powerful means of communication that can change people’s lives (to the extent that they say), then maybe Government should use this powerful means of communication to create positive messages to the public, in areas such as active and healthy living – we really need some joined up thinking here and move away from the thinking that if you ban things then the problems will go away. Organisations such as BERR could help as they have got significant budgets for this type of communication such as advertising. There could probably be more done with Business Links and regional agencies too.



The Government should sit up and take notice of their findings and react to their own research. BERR Guidelines and targets are not being met, and they need to be met to assist business and ultimately UK PLC. They should meet the current guidelines, which

state that guidance should be issued a minimum of 12 weeks before the regulation comes into force but over the past two years this target has been met for less than half of new regulations. The Government needs to resolve the problems of low awareness and poor quality of Government guidance, problems with the volume and complexity of regulation along with uncertainty, risk and lack of confidence in Government regulations by businesses.

____________

Recommendation 4: Communicate directly with businesses using high quality, simple

guidance



APPENDIX

1. Biographies and Interview Transcripts

---oOo--- Interviewee: Rosemary Smith Title and Position: Chairperson DMA (Direct Marketing Association) and Director of

OPT-4. Interview Date: 5th August 2008

Rosemary began her career in publishing and has been working in the list and data business since 1989. She became involved in the lobby against restrictive data

protection in Europe whilst working at the Periodical Publishers Association in the late eighties. She wrote the first guide to the 1984 Data Protection Act for magazine publishers and served on the Advertising Association Data Protection Committee and the Committee of Advertising Practice. Rosemary was later active in the British List Brokers Association (now part of the Direct Marketing Association) and wrote guidance for members on privacy issues. She served on the working party,

which drafted the list and database rules in the British Code of Advertising, Sales Promotion and Direct Marketing. Rosemary has been a member of the Direct Marketing Association’s Governance Committee for ten years and is currently Chairman of the committee, which oversees the mailing/telephone/fax preference services. She is the Chairman of the Direct Marketing Association, has been a Board Member for eight years and is an active member of the FEDMA List Council. She has given regular presentations covering permission based email marketing,

privacy, data protection and self-regulation to audiences in the UK, Europe, USA, Australia and South Africa. Her other company RSA Direct, offers direct marketing consultancy and list services. 1. Do you think the responsibility/domain of marketing law should reside with the lawyer or marketer and why?

“Corporate Governance is the responsibility of each and every employee. If a company is large and lucky enough to have a legal department then advice can be taken from that resource, however, small businesses often do not have a legal or marketing department and generally their main legal advisors are not likely to be experts in specific areas of marketing law, so smaller businesses need to be more responsible and knowledgeable in this area. Larger businesses can rely on in-house legal teams and capitalise on membership of large trade associations. On a day-to-day basis, the marketing person should be responsible for content and data relating to the running of a campaign. Marketing people, often unwillingly, have to



accept responsibility, especially when their legal department may be limited in size or simply not exist. The law as it stands in terms of data protection and direct marketing is principle based and therefore to a large extent it is open to interpretation. Recently in

my role as Director of OPT-4 I was called in to a large corporation to deal with an issue relating the law, whereby the marketing department needed to seek clarity between their need to produce a marketing campaign and the legal department’s concern that the marketing department may be in breach of marketing law. In this instance the legal team were restricting the marketing team in executing a campaign to the point where the marketing people could not market their company’s offering. The marketing department were convinced that they were operating best practice and needed an expert to advise on this subject. It transpired that the legal department were not aware of the

point of best practice and the CAP codes etc, so I was able to advise more accurately on the variation of options available to them such as the opt in and opt out choices and policies along with the detailed codes of practice available.” 2. How do you think the laws affect the small business?

“ I think marketing law is not specific in terms of size of business, it is related to anything a business communicates in terms of marketing, however, some sectors do

have further binding codes. Generally small businesses are not so aware of marketing law and information is difficult to find or access. Their options for information on the subject are probably limited to the Chambers of Commerce or Business Link, but the level of guidance here is not specific and not very informative.” The DMA have just created a website for B2B called the B2Balliance. There is a misconception that B2B is not affected by marketing laws, however, the vast majority of general laws effect B2B.”

3. What level of awareness do you think marketers have about marketing law? “I would describe the level of awareness amongst marketers as patchy. There is no real correlation to the size of the business and knowledge. I have met some small businesses who are very aware and well governed and some larger businesses that are not so well governed but have large legal departments, or who have the funds to outsource the advice, generally larger companies have more legal support. It is really the marketing law in practice that matters! The key thing is their control of the issues, you only need

one maverick in a team to wreck things for you by doing something like emailing a list without checking that permission has been granted, so it’s about managing the law in practice.” 4. Do you think the data protection law acts as an effective deterrent to businesses?

“It depends upon the specific law. There have been 170 pieces of legislation that effect

marketing and all sectors have been effected by across the board legislation such as data protection and there are now lots of laws to adhere to. Some provide for greater deterrents to enforce the law such as the FSA, which has the possibility to enforce huge fines and the law is very detailed. Other areas such as the telecoms industry have also come under scrutiny. Call centres were a significant issue a couple of years ago with firms like Kitchens Direct launching 23 million silent calls in two weeks. Ofcom can fine up to £50,000 for infringement. For general misleading content in an advertisement, the Advertising Standards Authority can apply for a court order to prevent the appearance or re-appearance of an ad. The ASA can also make public admonitions which can cause significant brand damage if the reputation of a company is called into question. The other incident recently, which I now refer to as ‘datagate’ was the HMRC loss of sensitive data records, since then, awareness of the public has risen significantly and since then, the Information Commissioner’s Office has been given more powers but the process to exercise the powers is still clunky. If an enforcement order is issued, for example, the company in question can appeal and then the case will go to the

information tribunal, but by this time the damage has been done.



5. Do you think that the law brought in to protect the consumers is appropriate for the business community?

“It comes down to proportionality. The Information Commissioner’s Office is less likely to get hot under the collar about B2B than B2C. Generally they will look at how many people have been affected by the breach. The Information Commissioner is interested in looking for the proportional response.

6. What is your opinion of the current availability of information on marketing law and training courses in the subject for marketers?

“I would say that the offerings available are piecemeal, there are some courses specific to sectors provided direct by the IDM, CIM and DMA, which are practitioner type courses, but these are not on a regular basis. I know from personal experience there is always an appetite for the subject, as whenever I am asked to speak at an event, the room is always packed, and I know it is nothing to do with me personally!! Much more could be done in this area to make information on the subject available to a wider audience even to just cover the basic essentials such as copyright, data protection and

Internet law etc. It would be great if a course could be developed.” 7. Do you think that the laws are realistic in terms of enforcement and the marketer’s ability to comply?

“The issue here is all about interpretation; marketers in companies will call me in and say, just tell me what I have to do to comply. It’s really about practical advice and

guidance. To help the marketer it would be useful for lots of the associations to collate best practice papers and bring them altogether in one website so that marketers can see these. The B2BAlliance has made a start on this.”

8. Do you think that protection of the recipient is at the cost of the business and thus impacts on UK GDP?

“I think there are many burdens on business provided by general legislation, BERR did

some research on the cost of legislation to businesses. When the Government brought in the telecommunications telephone preference service legislation which was applied to the general consumer, it was suggested that there should also be a Corporate Telephone Preference Service as the DTI said that there had been complaints from small micro businesses that when working alone for example in a shop, for one person to be taking sales calls meant that it blocked the single phone line and distracted them from serving customers. Now there are 1.2 million business people registered on the database but this actually only represents 69,000 companies, which shows that the main businesses

registering are the larger corporations. This is an example of a piece of legislation that is simply not working. BERR is hurting the small micro business, this piece of legislation is not proportionate to the damage that it is doing to these businesses. Currently, the Corporate Telephone Preference Service is the only one of its kind in Europe. YES, this piece of legislation is damaging to business and subsequently small businesses are breaking the law and most don’t even know they are breaking the law. The impact has been that this law prevents businesses from trading freely. It should be about proportionate legislation.“

9. How important do you think the DMA’s code of conduct and self-regulation is?

“The DMA has a very significant piece of guidance and you don’t have to be a member to access this document. It has really tightened up on the code, in fact the code goes beyond the law, so the self - regulation is almost a higher form of regulation. The

importance of this is that it is done by agreement rather than enforcement. Realistically,



the Government would not be able to fund regulatory methods that industry can fund and they prefer co-regulation, which involves Government working with industry bodies – for example the regulation of the Telephone Preference Service is governed by Ofcom

who awarded the contract to the DMA to monitor and this funded by the DMA subscribers.”

10. In your experience, have companies changed their direct marketing habits to accommodate changes in the law?

“Yes, absolutely. Permission statements or opt outs are much more common now. The Data Protection regulations have been around for 21 years now. However permission

statements are used less in B2B than B2C. I have a theory about each new channel, which is that the first new people to go to a new channel are often the outlaws; for example, time share operators in the 1980’s moved from newspapers to direct mail then the clean up happened to prevent supply of data and self regulation closed in on them. Email of course is much lower cost and the spray and pray of untargeted spam abused the channel, and then the PECR regulations came in, which made it illegal to do this kind of thing, which was deigned to separate the legitimate from the illegitimate. But deliverability of emails worsened as people started putting up barriers to receive the

emails and therefore open rates and click through rates started declining. This has a correlation with the volume sent. The marketing mix has become more sophisticated, for example financial and direct mail works well on paper, as people trust receiving detailed financial information on paper. There is also a generational issue here, whereby younger people are more open to electronic communications.”

11. Do you think that TPS, FPS and email marketing law is a good thing generally?

“Any industry and businesses needs standards and it gives me a business too! I would say yes, it is a necessary evil although Corporate TPS is a disproportionate regulation.”

---oOo---



Interviewee: Lord Cotter (Life Baron) Title and Position: Spokesperson for Innovation, Universities and Skills,

Spokesperson for Business, Enterprise and Regulatory Reform (since 8 Jan 2009) Liberal Democrat Party. (At the time of interview Lord Cotter was the Spokesperson for small businesses, Liberal Democrat party)

Interview Date: 15th August 2008

Lord Cotter has spent almost all his working life in small

business, much of the time running his own company. Brian Cotter joined the Liberal Party in 1983 and has been active member of the Liberals and then the Liberal Democrats ever since. Before it was axed by the last Government, Brian served as a member of Weston Community Health Council. Brian has worked extensively with charities at local and national levels. His policy expertise is in the Trade and Industry portfolio and he was appointed to the House of Lords in 2006.

Lord Cotter was raised to the peerage as Baron Cotter of Congresbury in the County of Somerset in 2006. Previously, he

was a Councillor at Woking Borough Council from 1986-1990 and Liberal Democrat MP for Weston-Super-Mare from 1997-2005 when he was their Spokesperson for Trade and Industry (Small Business).

Education:

St Benedict's School, Ealing, Downside School, Somerset

Experience:

After two years National Service in the Army he ran a small business in the distribution trade and been Managing Director of a small plastics manufacturing company

Council experience:

District Councillor 1986-90, Chair of the Council Youth Committee

Parliamentary experience:

1997-2005 MP for Weston Super Mare, 2002-05 Shadow Ministerial Spokesman, Trade and Industry; in the 2001-2005 Parliament, Member of the Deregulation and Regulatory Reform Select Committee

Interests:

Small businesses, education, the economy and issues concerning disabled people

Memberships:

ALDC, Amnesty International, the Green Liberal Democrats

• Liberal Democrat Peer

• Spokesperson for Innovation, Universities and Skills, Spokesperson for Business, Enterprise and Regulatory Reform (since 8 Jan 2009) Liberal Democrat Party. (At the time of interview Lord Cotter was the Spokesperson for small

businesses, Liberal Democrat party)

• Entered the House of Lords on 5 June 2006



• Previously MP for Weston-Super-Mare until 11 April 2005 — General election (stood again)

1. Do you think that marketing law should be the responsibility of the lawyer or the marketer? “In my experience as a small business owner in 1997 this matter did not really arise and the issues surrounding marketing law did not seem too relevant to our business at that time. Also at that time, I was spending 95% of my time working as an MP for Weston Super Mare in Parliament. So, I was relatively hands off in the business as there were managers to do the day to day running of the business. I think the subject of marketing law today would have greater issues affecting our business, however the business was sold to employees in 2002 and there have been many changes in this area

since then.”

2. How do you think that marketing law affected the small business decisions to communicate with each other? “I would make a more prejudicial comment here in that I would be concerned about data protection having crept slowly into a number of areas over the years and has become a problem, in that, it can hold back the implementation of things such as

marketing communications for business.” 3. What has been your experience of marketing law as a small business and in your role in Government? “For 8 years I was spokesperson for small businesses in Parliament for the Liberal Democrats. I took up issues in Parliament for the small business and worked closely with the FSB, FPB and Chambers of Commerce. I tended to deal more with red tape legislation and implemented legislation to help save the small business and engaged in other issues aside from marketing law. Such as areas to do with small business local pharmacies that were needing to compete with the large supermarkets and local public houses, they were really practical issues. I think that the Brussels red tape is a problem in terms of interpretation and the way we have implemented it in this country, for example Chinese restaurants are having difficulty cooking crispy Peking duck because their ovens need to be hotter than the regulation states, although they have been using

the same method for 2000 years, they are now having to pay out large sums to buy new ovens in. These type of circumstances may also apply to marketing legislation, whereby there is excessive implementation levels by certain individuals who have been given jobs in this country that most other countries in the EU would not consider being necessary. When I was an MP, I used to find out what was coming down the track from Brussels through the UAPME and would let the necessary businesses within the respective industry know what was coming down the track so they could respond early and so that the right questions could be asked.”

4. In your opinion, what do you think about the availability of information on marketing law for the small business? “It’s not an issue that I really came across as an MP or in business.” 5. Do you think that Government could do more to assist the small business in this area, and if so, what would it be? “A lot more needs to be done to keep an eye on marketing law. The concept of Regional Development Agencies was a good thing, but when it becomes an unelected type of quango it becomes a closed shop. We should have stronger council representation here supported by the Regional Development agencies. Then the SBC – The Small Business



Council was developed which was welcomed as there was a similar type of organisation in the USA called The Small Business Bureau, which was working very well. I wanted to have this similar type of set up, whereby there was one person in this organisation

responsible for the small business who was independent and the organisation was independent. But our set up with the SBC was not independent in my opinion, the head of the organisation seemed to simply sit in on meetings when we met and make the tea for the Minister! Rather than being the grit in the Oyster and making independent changes. Money was being channelled into this organisation, with no real results, so it was left to myself, the FSB and FPB to be the grit in the oyster. We managed to persuade the government then that there should be a small business minister who was Barbara Roach and subsequently Nigel Griffiths took over who was very effective in his

role and if you can get him to agree to an interview, he would be very good!”

6. If you could change anything about marketing law, what would it be? “We need proper consultation and effective examination of the rules, which should reside with the small business minister or I would like to see something similar to what they have in the US, such as The Small Business Bureau, small businesses need something similar to this, which is independent and provides small businesses with a

champion. Labour have done better than the conservatives in this area, the conservatives were not really very effective. Labour started off with all good intention, but we need something a bit stronger than Government in this area, something with. I have limited resources now being in the House of Lords, we would normally ask the Minister questions. We really need an independent body for small businesses and there is a need for a statutory small business minister. The FSB were always very good and effective, especially with their member surveys as they have a very active membership

and the FPB are also very good. We need more power for the small business.”

7. Do you think the laws are realistic in terms of enforcement and the small businesses ability to comply? Not asked question 8. Do you think that the SME copes better or worse than the larger corporation in term of understanding and implementing marketing law? “There is a major problem here and some big issues. Larger companies have departments that can help and that lack of resource with the small business is a big issue. Small businesses don’t have resources, time and money to cope with all these marketing laws. When I was running a small business, we would not have had the money or time to cope well and we had 30 employees! So we would have had a chance to look at these issues but the micro business will suffer because they just don’t have the resource.”

9. Do you think that data protection law that was originally brought in to protect the consumer is appropriate for the micro and SME businesses? “I have no personal experience really here. But I have to say, it does seem counter productive and needs to be seriously re examined and looked at again. This is an area of grave concern to business as it is a block to people to freely market their business and it is impinging upon the liberty of the small business. I would certainly go along with the tenor of what you are saying about freedom of communication within the business community and particularly for the small business. I have to question how often a person working alone in a shop or from home will be bothered by phone calls and how much time that would incur. You have got to be able to run a business in a reasonable manner. In Parliament in 1997 we had the opportunity to use the RIA – regulatory impact assessments and we managed to improve things as Government looked at the bills carefully. One question I would ask in this instance is has the RIA been done properly

in this area and I think this is a key point. Institutions should also be looking at



legislation coming down the line from Brussels and get parliamentarian to ask questions and if the bill has come through, there is still an opportunity to ask questions. There is also an opportunity to review a Bill after a set number of years if the

Bill expires, with some bills there is an opportunity for it to be renewed or get rid of it.”

---oOo--- Interviewee: Sir Paul Judge Title and Position: President of The Chartered Institute of Marketing (CIM) and Past

Master of the Worshipful Company of Marketors


Sir Paul’s current marketing and media interests include

being the President of the Chartered Institute of

Marketing (CIM), the Chairman of the Marketing

Standards Board, of the Museum of Brands, Packaging

and Advertising and of the CAM alumni magazine and a

Director of Tempur-Pedic International Inc. He is a

Fellow of the CIM and of the Marketing Society. His

initial career was with Cadbury Schweppes and Premier

Brands and he was previously also a Director of WPP

Group plc and of The Boddington Group plc. He is a

recent Master of the Worshipful Company of Marketors,

the City of London livery company for leaders in

marketing, was Chairman of the Royal Society of Arts

from 2003-6, of the IPA Marketing Effectiveness Awards

in 2007 and of Teachers TV from 2005-8.

His current honorary offices include being an Alderman of the City of London, President

of the Association of MBAs, Chairman of Digital Links International, of the British-

North American Committee and of the Enterprise Education Trust, Deputy Chairman of

the American Management Association, a Member of the Advisory Boards for the UK

India Business Council, for HEC in Paris and for the Athens University of Economics

and Business and a Member of the Council of the Crown Agents. He is a recent

President of the Chartered Management Institute and has Honorary Doctorates from

Cambridge, Westminster and City universities.

1. Do you think marketing law should be in the domain of the lawyers or the marketer – what responsibilities do you think each should have? “It is the responsibility of Parliament who need to balance the requirements of the marketing profession and businesses as a whole. The marketer should play a part in lobbying.”

2. The recent marketing trends survey 2008 carried out by the CIM showed a very low level of understanding amongst marketers of marketing law, what do you think could be done to improve this knowledge? “The classic business education courses have not historically included marketing law, as law and business have often been separate in this respect. I think that it is vital that the marketing profession and businesses have a good understanding of the basics.”



3. How do you think these laws affect the small business – do you think there is any difference between the small and large business in this respect? “All regulations tend to affect the small business more as generally, they have a lesser resource in this area. The larger businesses tend to have managers responsible for these areas and large specialist legal department to assist in matters relating to marketing law.”

4. What is CIM doing to help the small business in this respect – do you think this is the responsibility of trade organisations such as CIM “Most Chartered organisations tend to deal with the larger organisations. However, it is good when trade association can help smaller businesses as they have many other needs.”

5. Does the CIM have a policy about how it informs its members of new marketing laws? “Pass – ask Rod! Gerry comments that, as a member, she receives general email information, which sometime includes issues relating to marketing law.”

6. What is your opinion on the current availability of information on marketing law/training courses for marketers? “Low availability. Traditionally there is not a lot of legal content within marketing

courses. Ardi Kolah wrote a book about this where he discusses the issues.”

7. Do you think there is a benefit in industry organisations working together to collate a one stop shop for marketers and business to explain in layman’s terms what legal considerations need to be taken into account when doing implementing a direct mail campaign such as email marketing? “In principal yes, in practice it has not been successful. We did have the marketing

council, which was disbanded. I chair an informal gathering called The Panoramic Group, which includes CEO’s of all the major marketing organisations. What we find is that it is hard to allocate budgets to such a central resource and it is unlikely that Government will wish to provide this funding.”

8. How important do you think that lobbying is on the matters of marketing law? “Very important, the ASA lobbies strongly in areas such as children’s advertising and

the DMA lobby strongly in the area of data protection.”

9. Do you think the government could do more to help businesses in this area? If so what would this be? “It is not going to be a great priority for Government. For example there is an opt out for businesses if you have 20 employees in Europe. We could take advantage of this (deregulation of small businesses). In the UK we gold plate the law, which means we use section (2) 2 of the 1972 European Communities act to add to the EU directives that Ministers think are good things, as the British system is hard to get laws passed through. The 1973 law without debate means that it is easy to get legislation passed through Europe. It would be interesting to see how many of these marketing laws originated in Europe.”

10. How useful/important do you think co-regulation between government and industry is in terms of marketing law?



“Government set the rules and delegate the policing to the private sector, a bit like it is with the ASA. Co-regulation is a good thing as it allows the experts to be involved.”

11. If you could change anything about marketing law, what would this be? “The passing off law, which allows supermarkets to copy brands. Basically, supermarkets copy the look and feel of a brand and pass it off as their own. The result is that the supermarkets get credibility for a brand they do not own, when the owner and manufacturer of the brand has put in huge time and investment, it gives less incentive to manufacturers to be innovative and therefore reduces the manufactures

inclination to produce more great brands. The supermarkets are allowed to copy far too easily.”

12. Do you think that marketing laws are realistic in terms of enforcement and marketers ability to comply? “Maybe laws relating to data protection should only apply to businesses of a certain size.”

13. Do you think that the TPS law originally brought in to protect the consumer is relative to businesses? “I think there needs to be protection. I find cold calls a nuisance and junk mail. I think that companies send it out because it is worth it, if they get 1% response then it can be commercially worthwhile. I personally would prefer not to be called. Direct mail through

the post I find less obtrusive, but I think that phone calls can be a pain for the smaller business.”

14. What do you think the pros and cons of marketing law are and do you think on balance, the law is a good thing or a bad thing? “It’s a matter of whether Parliament thinks its right. We are a law-abiding nation and accept law and can lobby to change the law. MP’s vote as they are told, they go through

standing committees, which is like a mini house of commons, which they put together for each bill. Scrutiny is minimal. Parliament does not deal with the details on legislation and when people are lobbying, they need to lobby the departments not the MP’s. Trade associations in the UK are not good at lobbying, they are weak at lobbying at the European level. Lobbying in Brussels is the key and trade associations in the UK are much weaker than in Europe. We tend not to lobby well in Europe.”

15. Do you think that the protection of the recipient is at the cost of the marketing benefit to the business and ultimately has an impact on UK PLC and the GDP? “The law to protect the individual is right, on balance, I don’t have all the detail relating to businesses. I would say the worst intrusion for me is a telephone call, followed by email, and followed by junk mail through the post. Some of the most intrusive for junk mail can be charities and they are governed by the fund raising standards board.”

16. Do you think there should be a diploma in marketing law from the CIM? “Yes! May be you would like to approach me with one and we can research the market need for it!”

17. How do you think marketing law affects start up businesses? “Not a lot. I would say, nothing to worry about.”



---oOo---



Interviewee: Rt.Hon. Lord McNally Title and Position: Leader Liberal Democrats, House of Lords


At UCL, he was both President of Debates and President of the Students Union (65/66) as well as obtaining a B.Sc. (Economics) (66). In 1966 he was elected Vice President of the National Union of Students and appointed Assistant General Secretary of the Fabian Society before joining the full-time staff of the Labour Party in 1967. In

1969 he was appointed International Secretary of the Labour Party and in the next five years visited over sixty countries, including war zones in Nigeria, Vietnam, Bangladesh, and the Middle East. He served on the Bureau of the Socialist International and of the Monet

Committee for a United States of Europe. He had been a member of the European Movement since student days. In 1972, he provided research back-up for the Rt. Hon James Callaghan as Shadow

Foreign Secretary and joined Mr. Callaghan as his political adviser at the Foreign Office after the latter’s appointment as Foreign Secretary after the February 1974 General Election. In 1976, on becoming Prime Minister, Mr. Callaghan appointed Tom McNally Head of the Political Office in 10 Downing Street. During his time with Mr. Callaghan, Tom accompanied him to meetings with the Presidents Ford and Carter, Dr. Kissinger, Mr. Breznev and Mr. Gromyko, the Heads of Government of all the European Community countries, and a wide range of Government and political leaders in Africa

and the Middle East. In 1979, he was elected Labour M.P. for Stockport South and crossed the floor in 1981 to join the newly formed SDP. Throughout the 1979-83 Parliament he was a member of the Select Committee on Industry and Trade and from 1981 to 83 was SDP spokesman on education. In 1983, he fought and lost Stockport for the SDP. Out of Parliament, he was appointed a Parliamentary adviser to GEC (1983-4) and then Director General of the British Retail Consortium (1985-87). In 1987, he joined public

relations firm Hill and Knowlton as Director of Public Affairs, before moving to a similar position at Shandwick Public Relations in 1993. He subsequently became Vice-Chairman of Shandwick. In 2003, he was appointed to the new post of non-executive Vice-Chairman of Weber Shandwick following the take-over of Shandwick by American communications giant Interpublic. He left Weber Shandwick in November 2004 on his appointment as Leader of the Liberal Democrats in the House of Lords. Politically, Tom remained SDP until 1987 when he supported the successful merger with the Liberal Party to form the Liberal Democrats. He served on the Federal

Executive of the new party from 1988 to 1998 as well as acting as political adviser to the Party Leader, Paddy Ashdown. In 1995, he was appointed a Life Peer and became deputy-spokesman on Broadcasting. Following the 1997 General Election, he became spokesman on Home Affairs and in 2001 was elected Deputy Leader of the Liberal Democrats in the Lords. In October 2004 Lord McNally was elected unopposed to be leader of the Liberal Democrats in the House of Lords, succeeding Baroness Shirley Williams when she retired from that position. He pledged to position the Lib Dems as:

"the voice of conscience and reform on issues such as civil liberties, human rights, changes in the legal system and access to justice.”

"At the same time we can use the considerable experience on our benches to promote the

Liberal Democrat case on Europe, the environment, education and pensions,"



He said:

"Under my leadership I intend the Lords team to be fully involved in the wider campaigning party as we move towards what could be an historic general election for our party." Baroness Williams said the fact that the peer had been elected unopposed "speaks volumes about the confidence his colleagues place in him.” Lord McNally was appointed a member of the Privy Council in February 2005. He is a spokesman for Constitutional Affairs, with a brief that includes reform of the House of

Lords.

1. Do you mind if I tape the interview? “No, go ahead.”

2. What has been your experience within Government over the years with issues relating to marketing law? “The battle all the time has been to keep pace with changes in technology and on the marketing itself, so that you've got the balance right between giving the businesses the freedom to operate whilst protecting privacy. One of the first interventions I made in this place (Parliament), which got some coverage when we had a hostile question about junk mail and I intervened to say that, what’s the problem? If you don’t want the mail then junk it by all means but personally I find junk mail useful! Some people must have

thought that I was a strange individual for liking junk mail. It is very critical to get the balance right between people who say they don’t want direct mail by email or post but if we had blanket laws it would cut off a whole range of perfectly legitimate businesses. So its how you get the balance right between common sense and preventing people from being bothered by unsolicited approaches. During my 40 or more years in parliament the balance has always been between the pressure for business to use new techniques and technologies and consumer groups wanting to protect the consumer from unwanted approaches and I am not sure that there is an easy answer to that. On one

hand there is perfectly legitimate direct marketing, on the other hand we can get a whole range of messages such as those that are common from Nigeria, offering £5million in return for £500 and of course there is the Viagra too! It is a continual balance between protecting the consumer and on the other hand giving the direct marketing legitimate space to carry on their business.”

3. Do you think that marketing law should be in the domain/responsibility of the lawyer or marketer, if so why? “Marketing should be within the domain of the law of the land. What one tries to do in terms of business is to see where you can have codes of conduct and other such non-logistic ways of bringing order to a sector. In that way, it is far better to have your professional bodies laying down the guidelines than getting it into the hands of the lawyers, because lawyers are invariably add to the expense and to the inflexibility to the way things may go. Although not a direct example, a good comparison is the Press Complaints Commission where they have non statutory, non legal way of settling disputes and setting guidelines, that probably is the best way in business too, if you can have guidance and professional codes of conduct and the profession is self policing, rather than going down the statutory route as this ends up being too bureaucratic, inflexible and expensive. The great thing is that, if self-regulation does not work, you can always turn to statutory regulation as a final law, but if you start of with statutory regulations and that does not work you’ve got now where to go. In a way, the threat of statutory

regulation gives self-regulation a back up and a muscle. The two go together as



statutory regulation is used as a big stick if self-regulation doesn’t work. But particularly dealing with business, self-regulation is best, because it is being defined and implemented by people who have the sharp end experience of it.”

4. How do you think marketing law affects businesses decisions to communicate with each other? “Although I am not an expert on data protection, but I have to say that when you try to do something reasonable yourself, it comes as a shock that you can’t have the information you need or can’t do a certain thing because of the Data Protection Act. I do wonder whether the act is sometimes over interpreted and I think that this goes back to

the problem of statutory rather than self-regulation. In that people tend to play safe with statutory regulation and are not willing to apply common sense judgements and seem to stick to what seems to be the letter of the law. I would be interested in a concept that has been discussed called post-legislative scrutiny. This can occur after about 10 years when Parliament can look at an act and see if and how it is working in practice and take evidence, rather like they do with pre legislative scrutiny to see how the act is working in practice and see if it needs changing. I think that the Data Protection Act might be one worth looking act, just to see if the desire to protect data

doesn’t impede quite legitimate exchanges of communications between businesses and between individuals. The whole problem here is the shadow of the big brother society hanging over us. I mean, how much information is held? And how is it used? Some of this can sound quite sinister that the marketer with the data can, at a flick of a switch, identify a single individual in a row of houses who might be susceptible to approach. On the other hand if the collection of data allows the marketer to hone in on those who are most likely to want or desire the product, that is not sinister – it’s the way you look at

it…”

5. Do you think that businesses have changed their communication methods since TPS, FPS etc 6. What do you think the future holds for businesses with the changes in marketing law? 7. What level of awareness do you think businesses/marketers have about marketing law?

“Bleak, would probably be the right term. The full ramifications of the Data Protection Act are probably not even well understood by the people that passed the Act, never mind the general public or marketers! The problems is reacting to complaints, which are similar to when politicians go around to houses and we see signs on the doors for no callers, leaflets or newspapers etc, we are faced with the same problem! There is obviously a need to look at what restrictions there are on direct marketing. I think the problems with this is that direct marketing in itself has an image problem, because

people associate it with heavy pressure selling from double glazing and time share sales and kindred trades so over the years it has a bad image. I still get angry about a letter that came through the post offering £1million, the worst offenders were reader’s digest with their free prize draw. It is this type of thing that gives marketing a bad reputation amongst the public because they think it will be a scam or pressurised into buying something the don’t want. It is an intrusion in a way, because the seller is taking the initiative. If you walked into a shop in the high street such as a furniture store, the sales person is entitled to give you a pitch because you have taken the initiative and the first step by walking into the store, but if the sales person suddenly arrived at your front door to say, can I sell you a new suit of furniture, he is taking the initiative and that makes people nervous. There are bad examples of direct marketing, which make people hostile to the concept. It’s something that people in your industry need to deal with.”

8. How do you think marketing laws affect the small business – do you think

affects are the same as larger businesses?



“Talk with Lord Cotter on this. The same applies to legal compliance in general; the smaller the business then this is more onerous. The small business has to do the

compliance and selling as well. Large companies can afford to carry a second department to ensure that they are ticking all the right boxes. That is why there is a constant drive for lifting the burdens on small business and this has to carry on because, again, it is about finding the balance and protecting the consumer, without inflicting so much bureaucracy and red tape and compliance burdens on businesses, which are pretty heavy on the small business. It is a continual battle. In terms of the EU, I would have thought with a single market there will, at some time, be an attempt to get some convergence of the laws, particularly on direct marketing as there will be

companies who will be doing direct marketing Europe wide. I was amazed when I worked for the retail consortium in the 1980’s and coupons were certainly then, a really effective direct marketing tool with 5p or 10p off – people really used them and it did have an impact on sales. Mail order in those days accounted for around 4-5% of retail sales, but now of course with the Internet that has changed. I think the Internet has a more positive image and now people like buying from the Internet. Internet buying and selling has a more attractive image, partly because it is so convenient and people are taking the initiative, but saying that, once they have got you, they have really got you!!”

9. What in your opinion is the current availability of information/training relating to marketing law?

“If your industry is going to argue for self -regulation, this would be a good role for the body to undertake itself. Why are there so many institutions and what is the difference between them? My view is that one of the trade bodies or collectively they should

produce in layman’s terms a guide as a service to their members. I am quite sure a handbook would fulfil the need. Law firms do the same with finance bills, it’s a big re write but I am surprised that such a thing does not exist as it is needed and once the you have got the bible for industry, it only needs to be revised every couple of years.”

10. Do you think that Government could do more to help businesses understand more about the laws and if so what would this be?

11. Do you think that the laws are realistic in terms of enforcement and the ability of the business and marketers to comply?

“I think there is always a danger, particularly in this place( Parliament) in thinking that you pass a law about it and that fixes it! You hear the Government has passed home office bill each year dealing with various aspects of law and order and counter terrorism and some of these laws have never been implemented. It’s always been a temptation to

think that the statute will solve all, but in the real world, it’s not always the case. I am not well enough informed about the enforcement around data protection, certainly The Information Commissioner has the support of Parliament. The task is still to get the balance right between Government and data protection and not gumming up the whole natural flow of information within the society and it is a genuine dilemma, because technology is so awesome these days. There is an amazing amount of technology out there that could be intrusive. There is a case to be made to see if the act is working, but of course, you need to be aware, that if you have that review, there will be just as many groups leaping in arguing for the tightening and strengthening of the act and tougher regulation. “

12. If you could change anything about the data protection law what would it be?



“Take a deep breadth. The select committee investigate post legislative scrutiny and take a look at where we have go to or have we gone to far. It is a fast moving world and legislation, which may seem sensible at the beginning, may not be the same today.

Perhaps we need to look at other areas, as free markets create innovation.”

13. How important do you think lobbying is on the matters of the subject of marketing law? 14. Do you think that the TPS law originally brought in to protect the consumer is relative to businesses? Do you think this law is appropriate? And could this come up in post legislative scrutiny?

“What does worry me is that it is an approach to technology, which is in danger of fossilising business communications. If I say, the only way you can communicate is by writing them a letter, when in fact you could email or phone them, then this is a restriction on using technology to interact. The dilemma as you well know is there are technologies that can start going through data bases of phone numbers and carry on making automatic phone calls and let me say, the political parties are not immune to this criticism. You had better talk to Conservatives about this as they can afford bigger data banks that we can! I just think it needs to be looked at and certainly in my mind

there is a worry that unless all are careful we are going to fossilise communications particularly in business to business communications if we don’t keep this under review and see if there are better ways and more sophisticated ways of dealing with what can be for small businesses, and indeed all businesses time consuming and totally unproductive.”

15. Do you think that the protection of the recipient is at the cost of the marketing benefit to the business and ultimately has an impact on UK PLC and the GDP? “I think this should be buyer beware. We should protect people and this should be kept under review. I think that the trade bodies should produce evidence to keep this under review.”

16. Can you suggest anyone else that may like to be interviewed?

“Yes, I think you should speak with Lord Cotter who has been the Liberal Democrats’ Spokesperson for the small business. I will give you his details.”

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Interviewee: Danny Lopez Title and Position: Managing Director UKTI (UK Trade & Investment)


Brought up in Spain, Danny moved to the UK in 1992 and joined Barclays Bank in 1996, where he held a number of senior international positions, including Director of Business

Banking USA in New York, Head of Inward Investment in London and Business Development Director for Barclays' Commercial Banking Operations in India. In July 2006 Danny joined UK Trade & Investment (UKTI), the foreign commercial arm

of the UK Government, as Managing Director, Marketing, responsible for delivering a

new Marketing strategy for UKTI that promotes and showcases the UK economy’s strengths within the context of globalisation. Danny holds a BA (Hons) in Economics and a Masters in International Economics and Finance from the University of Essex. Danny’s interests include tennis, golf, travelling, cinema, motor racing and history.

1. Do you mind if I tape the interview? “No please go ahead.”

2. What has been your experience within Government/UKTI over the years with issues relating to marketing law? Do you have any experience in this area given the international role you play?

“No, would be my answer. I will just give you some generic answers and to be clear, I do not have a background in this area. What I would say is that in today’s world where companies are growing so fast, so for example, we see that companies can be internationalising within 12 months, frankly, we should be not be making a distinction

to the size of the company when it comes to communicating in the UK. To me it is a big mistake to have a distinction here between the SME and larger companies and even between the smaller SME’s. They should all be communicating within the same environment and it should be nothing to do with the size of the organisation. It’s got to do with their international plans and ambitions.”

3. Do you think that marketing law should be in the domain/responsibility of the lawyer or marketer, if so why?

“I think it has to be shared, because if you think about the rise of the senior marketer within organisation, the marketers never used to achieve board status, which was a big mistake and meant ultimately that companies were not taking marketing seriously and not even understanding what strategic marketing meant and didn’t understand how to segment audiences or understand audiences etc and it is only when the marketer became a board member that this got taken seriously within the company. So, if you

use that as an example, at the end of the day, I don’t think you can get away from the



fact that the lawyer has to be the one who has to be able to articulate and implement, but actually needs full input from the marketer, so to me it has to be joint ownership of that is possible in practice.”

4. How do you think marketing law affects businesses decisions to communicate with each other?

“I have not experienced this directly, but one thing I would highlight would be the ignorance of companies in this area. Companies do not know what they should or shouldn’t be doing and therefore means that they don’t have access to the right information which means that somebody is not feeding the information down. In many

cases, they don’t know who they should be accessing in Government to obtain information and I think it fair to say that they would that they would generally see it more as a hindrance than an opportunity to be able to communicate, this will always be hanging over like a gloomy shadow by thinking that they are going to be constrained by the way they communicate, as opposed to opening up a whole new avenue of communication.”

5. Do you think that businesses have changed their communication methods since TPS, FPS etc

6. What do you think the future holds for businesses with the changes in marketing law? Do you think the future is bright?

“I think like everything in Government, you only get it right when you do it in full

consultation and in complete joint partnership with your audience. So, when it comes to writing marketing laws then it will only get it right when there is a full partnership between the legal input, the marketing input and the regulatory input and of course the business input. So if I think of those 4 as a square to me each part has 25% of ownership and say and that is how you eventually get it right, so if that would be the case then the future is bright. If any of those four squared tumble or the percentage changes and one has more than the other then this could be difficult.”

7. What level of awareness do you think businesses/marketers have about data protection marketing law?

“I don’t think that the level of awareness is high in fairness, I think it goes back as what can be seen sometimes as a rather confusing delivery on behalf of whether it is the regulatory side of things or any other public sector delivery channel. I think more of an effort needs to be done to promote it effectively. Just like we are talking about effective marketing, then the delivery of services should be exactly the same. “

8. What do you think that could look like?

“Simplicity of message, clarity, and ease, does it have a tangible form? Yes it would be a user friendly website some kind of campaign to ensure it gets through in the right way. This could involve direct mail, seminars and workshops, may be something that could be done through the regional development agencies, who would be able to drum up very quickly a number of institutions and organisations which could be put together very quickly within their regions and that to me, would be a sensible way of doing it.”

9. How do you think marketing laws affect the small business – do you think affects are the same as larger businesses?

“My view is that it always has a much greater impact on small business because in a larger business you have more resource and far more, what I call, syndication of blame, which essentially means you do a bit of work and pass it on to someone else, who in

turn passes in on to someone else and you all have input - it’s a bit like insuring the



work. In an SME you don’t have that and the buck stops with one or two people and if they cant solve it, then they have got a problem and the problem can have a huge impact on the company. So, based on that, in these circumstances, I would say that far

more of an effort needs to be spent on SME’s as potentially it can have far greater impact on two things, one is their bottom line and two is their top line – their brand, culture and effectiveness and this could have an impact on both.”

10. What in your opinion is the current availability of information/training relating to marketing law?

“I think it is not good enough and more and more needs to be done. I am now talking

generally about other issues that have an impact on companies. Whenever I go to networking events across the country, businesses rarely have a clue about these issues and I think we need to highlight the need for greater awareness.”

11. Do you think that Government could do more to help businesses understand more about the laws and if so what would this be?

“I think that the Government does a very good effort, through a number of organisations

and business link services. There is a whole host of information available so its out there, but I think that more could be done to avoid the confusion and sometimes move away from information overload to generate the real information that businesses need. If you give someone 100 pages to read, you know they wont read a single page, if you give them half a page with 5 bullet points, you know they will read it and its more about doing something like that.”

12. Do you think that the laws are realistic in terms of enforcement and the ability of the business and marketers to comply?

“I don’t know that much about this, but I think you only get it right by working with what you have at the moment and getting strong and constructive feedback. Its not so much about whether its realistic or unrealistic, but about whether we apply it in the environment to ensure changes are understood when the come.”

13. If you could change anything about marketing law what would it be?

“Again, I don’t have the background, for the law to be workable, it needs to be very clear and focussed and it needs to be concise and it needs to have a purpose to be relevant and if it does not tick any of those boxes then I think we would have an issue.”

14. How important do you think lobbying is on the matters of the subject of marketing law?

“Yes, lobbying is needed but in my opinion it does not work when you have got too many bodies doing it. Needs one body representing different marketing disciplines.”

15. Do you think that the TPS law originally brought in to protect the consumer is relative to businesses?

“Totally not and anything that moves away from that would significantly hinder their business development opportunities. The bottom line is that businesses need to talk to make money; they need to talk because they need to learn from one another, and they need to talk because they create networks. If those three things aren’t happening it will be having a major impact on business, therefore it is a problem.”



16. Do you think that the protection of the recipient is at the cost of the marketing benefit to the business and ultimately has an impact on UK PLC and the GDP?

“Like I said earlier any analogy you choose will always prove that a lack of a conversation, or an opportunity to share or an opportunity to be able to talk about joined cross cutting business development will always have a negative impact on companies progress and of course will always have an impact on GDP. It is important to add that it is important to put that in the context of what our competitors are doing and I don’t know what marketing law is like in other countries in the UK we always pride ourselves at being at the crossroads of international business, and we pride ourselves

on our history of having started the industrial revolution having really kicked off what international trade is all about. Our international trade started with the focus on the Thames. It is now just the same about having conversations, so if you are destroying that then you are having a big impact on the economy.”



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Interviewee: Phil Orford Title and Position: CEO Forum of Private Business (FPB) Interview Date: 22nd September 2008

Forum of Private Business Chief Executive, Phil Orford began his career in sales before starting his own laboratory and scientific

supply business at the age of 21. In the years that followed, he was involved in a number of start-up companies, including two small manufacturing companies, a chemical waste management company and a small facilities service company. Over a period of 22 years, Phil’s interests eventually formed a small group, which at its peak, employed more than 100 staff and which had a turnover in excess of £10 million.

In 2005, Phil sold his interest in the group and set up a new business to assist small companies to comply with environmental legislation through the use of web-enabled applications and tools. Having been involved in business start-ups and every activity needed to develop and grow a small business, Phil is passionate about supporting the SME sector – the

backbone of UK plc. He believes that the sector needs the right balance of freedom, intervention and support to enable entrepreneurs to innovate and grow. On his appointment in February 2008, Phil said, ‘Smaller businesses have borne the brunt of over-regulation and excessive taxation in recent years. The FPB's job is to be the coordinated voice of its members, to fight for fair treatment and, in doing so, support their growth. As Chief Executive, my job is to ensure that our voice is heard by those who influence our entrepreneurial culture and to help protect that culture by

campaigning for our members' interests.’

1. Does the FPB lobby on issues relating to Marketing laws and the SME? “We have not done anything to date, although it is something that we will be looking at in the future. Anything that affects the small business is of interest to the FPB and myself and therefore worth discussing. There is a degree of ignorance on this issue of marketing laws as there is very little information available to us. If laws affecting the

ability of small businesses to communicate worsen significantly, then we would consider it time to act.”

2. What is the profile of your members? “They are small businesses who employ people, they are generally not the self-employed such as consultants, plumbers etc. The FPB services are tailored to meet the needs of those small businesses across all sectors and all regions and the services we supply such as our guides are specifically for this size of small business, which is roughly a business employing 5 – 25 people. Therefore, our benefits such as legal expense insurance, covers all officers in the business and partners. Our membership totals around 25k. We differ from the FSB, in that we have business membership as opposed to individual membership. The FSB membership is taken out purely for the individual, so, if you want to have all of your officers in your business covered, all would have to take out individual membership. Although in some ways we compete with the FSB in



terms of membership, in other ways we collaborate closely on representing the small businesses interests.”

3. How aware do you think SME’s/your membership are about laws regulating the use of direct marketing methods (i.e. direct mail preference service, telephone preference service and fax preference service)? “Unfortunately I don’t think they are very knowledgeable at all! The FPB is in a similar situation, we are a small business too, employing just 30 people and we are not knowledgeable at all about laws surrounding marketing communications. We are aware in general about laws and requirements such as TPS, and direct mail laws overall, but

not in the absolute detail. We will be looking at this in much more detail in the near future as it is a communications issue and we need to communicate with our members. We have some anecdotal evidence from a business partner/associate (bank) that some of our customers perceive our email newsletter communications as a sales tool to sell third party products, which is not the case or the intention, rather than information and awareness related, which is our intention. We need to inform our members of their entitlements and benefits from time to time and make them aware of new issues and regulations that could affect their business.”

4. Do you think the Government could do more to make SME’s aware of regulations relating to marketing law (i.e. awareness of requirements for details on emails plus co-regulation with organisations such as the DMA)? “Yes, they probably could. Organisations such as BERR couple help as they have got significant budgets for this type of communication such as advertising. There could

probably be more done with Business Link too. I have only been CEO of FPB for 6 months and we will research more in this area as we have some ignorance in this subject area and I imagine community leaders and business owners feel the same way.”

5. How important do you think it is for businesses to communicate freely with each other? “The issue here is about reputable businesses as opposed to non-reputable businesses.

There are certain businesses that set up and simply exist just to send spam mail to businesses and people, this just damages the reputable business. I think that businesses should be able to communicate freely, but should not be inundated with sales calls and emails to such an extent that it becomes a nuisance. Freedom of communication should be allowed. There should, however, be restrictions in areas such as cost and environmental issues and they should be allowed the opportunity to opt out or unsubscribe, which is sometimes impossible and the only way to screen these out to a degree is by good spam filtering systems. Industry could really do itself some favours

here by communicating better. It is really the minority that causes the problem for the majority. It is vital that businesses can communicate more freely and it is about managing the process.”

6. Could the FPB do more to lobby on the issues relating to constraints placed on businesses by the Government to allow them to communicate more freely? “Yes, absolutely! Our aim is to understand this area better so that we can fully relate to the constraints that are being placed on business. The FPB are very interested to be involved in this area and lobby in the interest of our members to allow them to communicate freely, and at the same time to help with members not getting inundated with irrelevant marketing communications. “

7. Do you think that marketing law should be in the domain of the lawyers or marketers, if both, what responsibilities do you think that both should have?



“No comment, other than the lawyers seem to be more effective at marketing their business than the marketers! That is, if what you say it correct that a law firm is listed first on a google search for marketing law above The Chartered Institute of Marketing.”

8. What is your opinion on the current availability of information/training relating to marketing law for the SME? “Again, no comment really, as I am not aware, nor have I come across much information in this area and I research a lot of areas of red tape and have extensive knowledge on the burden of regulation to businesses. So probably, as I have not seen anything much in this area, it must be very limited. I do extensive research and I have

personally not come across marketing law before in any great detail. I therefore think that the small businesses are fundamentally not aware of these laws and that is the case in general for regulation as a whole, unfortunately awareness only occurs when it is too late and this is normally when they have already broken the law.”

9. Do you think that the laws are realistic in terms of enforcement and the ability for the SME to comply?

No comment due to lack of firm facts relating to enforcement. 10. How important do you think it is to lobby the Government on the matters of marketing law? See number 6

11. Do you think that the data protection law brought in to protect consumers is appropriate for the business community? (Corporate Telephone Preference Service). “I would be very concerned about this potentially very worrying trend of businesses registering on the Corporate Telephone Preference Service. If we were to extrapolate this out to the end degree, it would mean that I could not speak to other businesses and that is not good for UK PLC! The inability to contact other businesses will stifle

innovations, ideas, solutions, and product development and stifle the UK economy as a whole. If you were registered with the corporate TPS, we could not contact you as and likewise you could not contact us, so if we could not speak to each other, we could not discuss these important issues. In fact we did in effect screen you out in our initial screening process for this discussion, so we can be tuned out from approaches by telephone and your call was useful, so this has made me think. I think there are serious risks to business if they can not talk on a regular basis and at this stage we wont realise the effect this could have on the UK economy until it is too late, once it has

decreased the whole marketing mechanism and it will only be then that people realise the impact that this has had.”

12. Do you think that protection of the recipient of direct mail/marketing is at the cost of the marketing benefit to the SME? If so, do you think this has a cost to the business in terms of implementation and revenue gained and thus a cost for UK PLC GDP? (This relates to the fact that more and more businesses are registering for the TPS – especially large businesses, which means that it is hurting SME not helping them.) See question 11.

13. What impact do you think it will have on businesses if they cease communicating with each other? See question 11.



Interviewee: Ed Weatherall

Title and Position: Chair B2B Institute of Direct Marketing Council, and Managing Director of Concep.

Interview date: August 2008

Edward Weatherall is one of the founders of Concep and is the Managing Director of the London office. Over the last four years Ed has consulted with global organisations on the successful

implementation of effective email marketing strategies, working with the likes of Cap Gemini, BearingPoint, The Institution of Civil Engineers and Cushman & Wakefield. Ed is also a founding member of the IAB email marketing council and a regular speaker for the IDM.

1. Do you think that marketing law should be in the domain of the lawyers or

the marketer, if so why and what responsibilities should they have? “I think any change in the laws needs to be done by a lawyer but it needs to be in marketing speak and language for the marketer and layperson to understand. At the

moment the law is not black and white so it ends up being more of a policy within organisations and therefore sometimes marketing people tend to ignore the requirements. Lawyers need to translate the law into layman’s terms. Any charges brought against a company should be down to the lawyers to fight on the behalf of the marketer or organisation. However, if it is simply an issue relating to data protection then a marketing person should be able to deal with this perfectly well as marketing people should be aware of best practice and involved.”

2. Do you think these laws are stiffling industry? “Laws are changed for a reason, however, the Government should consult and industry in my opinion has not been effectively consulted on some of these issues. Otherwise, what is the point in creating these laws without the correct information? Trade bodies are there to talk and proactively work with industry. Government should consult with experts who specialise in specific areas to get the best level of consultation.”

3. How do you think that the current marketing law affects businesses decisions to communicate with each other?

“Two things, there may be fear of embracing new channels and new technologies, or businesses may take on new channels but ignore some of the legal aspects but with just put a toes in to test the water first and carry on with these marketing activities until they get caught. It is quite scary how many people and businesses are not aware of the TPS and FPS so the people who comply loose out so by blocking everyone for the sake of stopping a few bad guys means the good guys suffer.”

4. What level of awareness do you think that marketers have about the laws relating to data protection?

“I think there is a certain reliance on suppliers to provide expertise nowadays. Marketers and businesses tend to rely on suppliers such as marketing agencies for best

practice, this could bite them further down the line as often contracts with agencies



state that the responsibility lies with the client. Sometimes businesses buy data lists and assume they are clean and do not ask questions such as where did the data come from and has it got the correct opt in requirements, which is the responsibility of the

business to ask the right questions about the data lists.”

5. Do you think that TPS and FPS and email marketing law are a good thing? “Yes, to a degree as we need to protect businesses but significantly more could be done through best practice and through consultation with marketers and further through training. We have got to have best practice, however, not everyone is a subscriber to this and there is always a rogue element and if there is no real punishment then there

is no real need to comply, is there?”

6. Do you think that the laws are realistic in terms of enforcement and the marketer’s ability to comply?

“No, there is no real enforcement. Although The Information Commission has been given more powers since the Government lost all those data records, but realistically it is physically impossible for The Information Commissioner to fully enforce the law.

Anyway, busy business recipients of unsolicited mail are much more likely to delete the mail rather than complain as they simply do not have time, its only really those with less time or busy bodies that will complain so those operating poor practice are much more likely to get away with it and those operating best practice loose out.”

7. How do you think these laws will affect the small business? “The problem here is related to time, money and personnel resource. Does the small business have the time to know all the laws? They do not have time to know all about the TPS, FPS, data protection from both UK and European Commission, and then relate them to the advertising laws and all the other marketing laws, which happen to overlap and therefore some laws change or contradict depending upon the circumstances so it makes it much more difficult for the small business to comply and thus these businesses are most likely making honest mistakes. Sometimes, also in the large companies, there can be problems too, decisions made from the top down can be lost in

translation to the person implementing so people can get lost in large organisation i.e. if a person in an events company needs to meet its targets to get say 150 people to attend an event the person responsible for meeting the targets may cut corners in terms of data protection in order to meet the targets which they are under pressure to meet.”

8. What is your opinion of the current availability of marketing law information and training courses?

“There are a few courses about but they are more for the practitioner and very expensive. So for the small business, to spend large amounts and spend a whole day out of the office can be very costly to their business. Trade bodies try hard to help, but small businesses have to pay to be a member and they may think that their funds may be better spend on their marketing activities such as a new website. Government sites are directed more to the legal profession so small businesses and marketers do not really know where to go and there are so many grey areas. The Direct Marketing Association offer good advice, but again it is costly to become a member for a small business.”

9. How do you think businesses have changed their marketing communications methods if at all?

“No, I do not think that they have changed apart from new email and SMS types of channels becoming available. I think they are using more channels more often – more of

the marketing mix. Often its cost driven and I notice, that if I put the term marketing



law into google that the law firm Osborne Clark appears first and the CIM is second on the list!”

10. Do you think that the data protection law originally brought in to protect consumers is appropriate for the business community?

“Business to business companies selling to companies have shot themselves in the foot by opting in to the preference services such at TPS and FPS. Companies will always need to purchase products or services from each other so it does not make sense. There is currently a double opt in requirement for consumers and an opt out requirement for businesses. There can be a problem when businesses are using the slightly more

relaxed opt out law when contacting names business people to sell consumer items. At our company Concep, when we started up, we could not afford the money to subscribe to the TPS list, so had this been in force at the time, I doubt whether we would have been able to start up our the Concep email marketing business, so most likely Concep would not exist today or the regulations would have been so daunting a task, that we most likely would not have started Concep. Do you think this is affecting businesses starting up today? “ Probably, it is odd that TPS is often perceived as a telesales company requirement but businesses don’t think

that every time they pick up the phone to talk with prospects or customers they are doing selling, which means that registering with the TPS can be detrimental to a company as all companies need to promote their goods or services. It comes down to relevance and of course, companies should respect the wish of the person who has opted out.”

11. Do you think that the protection of the recipient is at the cost of the marketing the business and thus impacts on UK PLC GDP?

“This is a double edge sword. For people providing legitimate communications it is better that people are doing this right in a targeted manner, but there is no real punishment for those not adhering to the law so we are still all being spammed. At Concep, it has cost us more to have to train people, so we have been punished financially for doing the right thing. The digital age is has confusing laws and there are different interpretations throughout Europe i.e. if you have an office in London and

France you have to adhere to French laws even if you are only targeting the UK! Which makes the law even more confusing and costly to companies.”

12. How has your business been affected by marketing law? “We always try to view the law as positive and that it is there for making the industry better, but there is not a joined up effort to comply with the law as many of the emails we send out on behalf of our customers may not reach their recipients and this is

noting to do with the laws. For example we get affected by ISP blacklisting, there is nothing legal about this it is just a community who have decided on a way to be self regulated and often good and legitimate companies like ours who adhere to the law and best practice are getting blacklisted. In fact, there is a company called Spamhouse, which is one man based on a barge in London and many ISP’s go to him for blacklists, even the company Accenture appeared on his blacklist. In the United States Spamhouse has been charged with offences relating to this, but the UK law does not protect companies like us from this person who is a self appointed judge and executioner, but the ISP’s seem to listen to him, which is a concern. There is still a lot of stuff coming out of China and Russia, which is not being pursued by the legal channels. We get asked a lot for advice by our clients and although we do assist, we have to advise them to get their own legal council, as we are not lawyers.”

13. How often do you get asked for advise relating to data protection in your business?



“One of the reasons why people use us is because of our understanding and compliance to the law. We provide a checklist of questions to our customers to check that their data is in order and we do not deal with companies that have procured lists rather than

organic in house lists.”

14. How have your communication methods changed with your customers? “Concep are quite unique in that we produce and adhere to our own best practice, which goes far beyond what the policies are. We are very diligent in the acquisition of our customers and our policy has been a cultural element embedded in our company from the outset. We believe at Concep that it is all about relationship, rather than

simply transactional business. We believe in email marketing as a serious channel and not just a medium to hit lots of people quickly as this can damage a brand, that’s why we specialise in B2B as it is even more so about relationships not a volume business, hence we do not charge per email.”

15. Have you noticed that your customers are buying different services? “We get lost more contracts now for the advisory side of email marketing. For example

the recent requirements to have certain company details on all emails took most of the industry by surprise and still, many companies are unaware of this requirement.”

16. What do you think that the future holds for businesses with changes in marketing law?

“The future is hopefully bright but if people are still acting like criminals, they are not

going to care if the law changes. I would like to see more power to self regulation and education and I think the future would be good if there was less meddling by the Government, because people are making decisions without the experience of working in the industry and that is not a good position to be in when implementing such a law.”

17. Do you think that the Government could do more, and if so what would this be?

“Get the right people in place from the outset, for example a recent talk at the IDM by Lord Puttnam emphasised that he would be the kind of person to be involved in consultation and not the civil servants. They need to invite people to discussion with varied groups and different demographics to keep the discussions unbiased.”

18. Given the current laws what do you think are the marketer best tools to market business to business?

“All the mix! Email etc and using these at the right time. Look at the strategy first, not the laws or cost and then decide what the business needs to do to be successful.”

19. What does the term marketing law mean to you? “Red tape, sometimes a good thing, but more work for us!”

20. Does your business have any policies relating to marketing law? “Yes, we have policies for all Internet relating practices.”

21. Does marketing law improve your marketing communications? “This is difficult, it should do but depends on what they are. Our communications are always done with the recipient at heart.”



22. What would help you make marketing law easier to implement and understand?

“A one-stop shop, which translated laws into business and marketing speak, so loosing such terms as herewith and unto etc, which are unrealistic and open to various levels of translation. The Information Commissioner site is quite good as is their help line but they really need more power.”

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Interviewee: Clive Mishon Title and Position: Chairman Institute of Sales Promotion (ISP), Chairman Pulse

Group

Interview date: 18th August 2008

Clive Mishon has spent the last 20 years working exclusively in the marketing services sector and has developed his career as both a marketing practitioner and business manager.

In 1987 Clive acquired Marketing Drive from the DMB&B Group and proceeded to establish the business as one of the leading promotional marketing consultancies in the UK . In 1998 Marketing Drive was acquired by True North Communications, where Marketing Drive Worldwide was adopted as the global brand for non-traditional advertising services within the group. Clive was on the worldwide board

and was President for the operations outside of the USA. In July 2001 Clive founded the consultancy and investment company Mentor Marketing & Investment that is focussed on providing the capital and experience to support the growth of businesses exclusively in the marketing services sector. In relation to this Clive is working with a range of businesses that include:

a) Pulse Group – marketing services group specialising in promotions, experiential and exhibition design and build services

b) Evoke – creative experiential business working with Adidas, Arcadia, Red Bull,

French Connection

c) Kitcatt Nohr Alexander Shaw – specialists in Direct Marketing.

d) Mtivity – on line software that automates the design, print and production processes of marketing campaigns

e) Marketing Mentor – On-line ‘just in time’ training for all things ‘marketing’.

Alongside Clive’s commercial career he has played an active role in the industry’s trade bodies and was the Chairman of the Sales Promotion Consultants Association (SPCA) from 1998-2000.

In November 2001 Clive was elected the first Lifetime Vice President of the Marketing Communications Consultants Association (MCCA) In February 2001 Clive became Chairman of the Sales Promotion and Direct Response Panel for CAP. In July 2002 Clive was elected a Fellow and in January 2007 became the Chairman of

The Institute of Sales Promotion (ISP) In October 2002 Clive was elected to the Marketing Committee of the MCC (Marylebone Cricket Club)



1. Do you think that marketing law should reside in the domain of the marketer or the lawyer, or both? If so why?

“The marketing industry should be self-regulatory. Primarily marketing law has been set out by the industry for the industry that is engrossed in the CAP Code (Code of Advertising Practice). However there is increasingly more and more legislation from Brussels and Westminster that threatens the self regulatory system. We (as marketers) should be running this. Lawyers should only come into it when we are discussing the law of the land. The principal operators on a day-to-day basis should be the marketers, the lawyers need to check, but the marketers should construct. The lawyers should be responsible for law and be answerable to EU and UK parliament.”

2. What type of organisations does the ISP have as members? “We have a combination of blue chip and small businesses. They mainly fall into three groups, agencies, client companies and service companies.”

3. How do you think these laws affect the small business as opposed to the larger companies, do you think there is a difference here? “Everybody is affected, as there is so much red tape and bureaucracy now. Large companies have more resources than the smaller businesses so it is probably harder for the small business. However, the ISP legal advice service deals with both general and specialist requests for assistance so our members have access to the largest source of legal assistance in the area of promotion than any other similar trade organisation.”

4. What is ISP doing to help the small business in this respect – do you think this is the responsibility of trade organisations such as ISP? “The ISP remit is to promote and protect the promotions industry. We have a legal advisory service and provide education that offer practitioners a professional qualification on the subject. These ISP qualifications include the certificate and diploma in promotion, and these include digital and direct marketing law. The ISP also offers as a Certificate in Motivation. These courses offer a good introduction to the Code and laws

but I think the industry needs a better grasp of the code and to use the legal services where necessary. Now I think about it, there may be a need for a diploma dedicated in marketing law.” 5. The recent marketing trends survey 2008 carried out by the CIM showed a very low level of understanding amongst marketers of marketing law, what do you think could be done to improve this knowledge? “I agree, there is a very low level of marketing awareness on the subject and limited understanding of marketing law generally. Large companies tend to ensure that they can stay within the boundaries of the law due to in-house expertise. I agree with the findings of the survey and that is why I think there should be more education courses to address this issue.”

6. What can be done to help this situation? “Get as many marketers and businesses as possible to work together to promote best practices in marketing compliance. I would like to stress that the greatest amount of ignorance in this area is from those who are working in parallel disciplines where they do not recognise that they are ‘straying’ into other marketing disciplines. For example if you look at the premium phone line issues whereby broadcasters have run a promotion on air, they did not look at promotional law properly and did not taken any of this into account before running their campaigns. The whole area of compliance is low and



ignorance is no defence and they need to understand what relationship promotional law has with other areas of law.”

7. What do you think the answer is? “Institution and organisations should be more inclusive rather than exclusive and there is a need to embrace promotional law across all disciplines. For example advertising people often see themselves as a separate part of the mix, when actually promotion is a part of what they do not apart.” “Sales promotion is both about the content and the message, which is then delivered

through a chosen channel such as on line or direct mail. Promotion is a call to action, which is true irrespective of the chosen channel. The message delivered must operate under the code. The danger is that practitioners in different media channels are tripping over the code and it is the ISP’s job to find ways to engage with these communities.”

8. How useful/important do you think co-regulation between Government and industry is in terms of marketing law?

“We engage with other disciplines that are involved in co-regulation. If I came across a promotional issue, we help, because we do not want to fall foul of compliance. We come across prejudice in promotion due to other people’s perception of our industry. I am also a Director of a direct marketing company and am trying to change the perception there too, which is a challenge. It stems from the 1980’s when promotional content was driven by the FMCG marketing and promotion was the cuddly toy you got on the back of the Frosties packet! We have debated the subject of promotion in the House of

Commons recently.”

9. Does the ISP have a policy about how it informs its members of new marketing laws? “We have an email service to notify member and seminars too.”

10. What is your opinion on the current availability of information on

marketing law/training courses for marketers “There is a lot about, but it is not well coordinated, although there is good industry content available, there is no uniform.”

11. Do you think there is a benefit in industry organisations working together to collate a one stop shop for marketers and business to explain in layman’s terms what legal considerations need to be taken into account when doing

implementing a dm campaign such as email marketing? “Yes!”

12. How important do you think that lobbying is on the matters of marketing law? “Very important! We have suffered as we have to compete with much bigger and better organised organisations that lobby against us. We use the Advertising Association (AA) to help lobby for us. The advertising industry gets hit very hard and blamed for a lot of things to do with our health such as advertising certain foods to children as it is made out that advertising and promotions are at the root cause of obesity. Of course these special interest groups do not take into account how peoples’ lifestyles have changed. In fact, we have the same calorie intake today as we did decades ago when there was not so much obesity, however, our lifestyles have changed such that we are not burning off

those calories as we did years ago – as playing fields are turned into flats and



competitive sport is frowned upon (except amongst the elite). These facts are often difficult to put across and substantiate effectively. They like to create a headline piece of legislation and the advertising industry is the first to be blamed. We should remember

that the creative industry is extensive in the UK and contributes significantly to UK PLC and if it gets hit hard, we all suffer.”

13. Do you think the Government could do more? If so what would this be? “If they think that advertising and promotion are such powerful means of communication that can change people’s lives (to the extent that they say), then they should use this powerful means of communication to create positive messages to the

public, in areas such as active and healthy living – we really need some joined up thinking here and move away from the thinking that if you ban things then the problems will go away..” 14. Do you think the laws are realistic in terms of enforcement and marketers ability to comply? “Yes and no! It works in places but for example, law on digital communication does not

run across borders and therefore it is difficult to ensure general compliance. It is odd that we allow the rogue 5% to govern the other 95% of good marketing citizens!”

15 Do you think that the TPS law originally brought in to protect the consumer is relative to businesses? “I really don’t know enough about it specifically relating to business. Although, I think

the TPS is a really good idea for business to consumer.” 16. Do you think that the protection of the recipient is at the cost of the marketing benefit to the business and ultimately has an impact on UK PLC and the GDP? “Yes, it is costing business a lot. We do everything to ensure that the consumer opts out or opts in, or whatever the case may be. I am in favour of choice and allowing people to

communicate and receive information – however I am in favour of personal choice and therefore consumers should have the right to opt out. Government should not legislate in these areas that take away our rights to receive communication or not.”

17. How do you think marketing law affects start up businesses? “It does not affect the way in which businesses start up if you have seasoned practitioners. However, it does mean that businesses need more resources to start up

and need better resources now than they did years ago. There are higher barriers to entry that works against starting up a business in the front room of your house. There is now so much red tape with marketing law and other kinds of laws such as employment law that it makes it very difficult to start a business, but marketing law should not in itself be the barrier to starting a business.”

18. Do you have anything else you would like to add on this subject? “Having had this discussion it has focussed my mind more on marketing law as an overall subject and perhaps it should be more integrated. I hope the comments in your paper will prompt organisations to pull together more in this area. Our main members are agencies who buy into education and legal services but really it should be the marketer that should be taking primary responsibility for ensuring their brands comply with marketing law, not their agency.”



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Interviewee: Sally Muggeridge MBA, FCIM, Chartered Fellow CIPD, FRSA Title & Position: CEO Industry and Parliament Trust Interview Date: 14th November 2008

Sally Muggeridge was appointed Chief Executive of the Industry and Parliament Trust (IPT) in 2003.

In a varied business career, Sally has had considerable experience working at a senior level in major international companies including BT, Cable and Wireless and Pearson. An IPT Fellow since 1995, Sally's interest and involvement in the work of the IPT extends back over many years whilst in corporate employment and she has always recognised the important role the

IPT fulfils in bringing business and legislators into mutual understanding and dialogue.

The IPT has gained much international prominence, recognition and emulation since its founding in 1977. Sally has been building on this sound base ensuring that the IPT continues to play a full part not only in the UK but in the international dimension. Similar bodies are now established emulating the IPT in other countries, all forming a

vital link between Government and wealth creators.

18. In your capacity as CEO of IPT what has been your experience with marketing laws “Yes, we usually get involved in proposed legislation and we endeavour to make MP’s understand the impact of proposals. Usually proposed legislation starts with a problem, such as junk mail and so then MP’s think it is a problem that needs to stop, so they

legislate against it. The problem is that they legislate for the minority who are doing things badly, instead of the majority who are doing things well. Therefore laws tend to be reactive. It normally starts with an MP’s constituents getting up in arms about something, then the MP’s get up in arms, then Parliament gets up in arms. Unfortunately what happens is that in the process, not all the real issues and consequences are thought through and we get laws that are fundamentally flawed – a good example would be the dangerous dogs act. At the IPT, we have a marketing programme that we have put together with Bradford University, whereby we introduce

MP’s to the principals of marketing and thereby MP’s can have better knowledge with which to judge issues if and when they are raised, and have a good understanding of the importance of marketing within business and the vital role that it plays. It is important to know, that every time legislation is proposed and goes through, an impact review will be conducted and is available for discussion for interested parties to add comments. You can sign up for this on the European website and make comment on proposed legislation, however, in the UK this is not done so well and is not so easy to make comment on this documentation, as the legislation could start off in the House of Lords or House of Commons. On 3rd December we have the Queens Speech, where the Queen presents what her Government is going to do for the next 12 months, along with a long list of topics that Government will deal with. Companies and institutions have a responsibility and an obligation to market themselves when legislation is proposed and should push through for MP’s to understand the challenges they face, furthermore, they should always have a relationship with their MP, as they never know when they will

need that MP to help them. Having a good relationship with their MP means that the



MP can have a good understanding of the business issues they and their business community faces and is then, therefore well briefed on supporting these matters.”

19. Often burdensome regulation is reported as being areas such as health and safety etc – how burdensome do you think marketing laws are on businesses

“Yes, regulations in the UK are very burdensome for businesses and the fact is that UK businesses are extremely diligent in terms of the way that they approach and comply to these regulations. A – you have to put these practises in place and B – MP’s don’t understand how extraordinarily burdensome these regulations are for business. What is important to recognise is that regulations effect all areas of business For example

legislation relating to direct marketing will ultimately impact all areas of business from employment law to general day to day marketing activities. So, when a business has reorganised itself to deal with regulation, then a further regulation comes into practise, they have more and more burdensome issues to deal with. There is certainly a misconception in this area and a dichotomy in what MP’s and businesses believe to be a problem. We know this at the IPT because we did a survey of 500 businesses and 9 /10 businesses thought these regulations were a tremendous burden and 3/10 MP’s thought likewise. So there is a huge difference between what businesses think and what

MP’s think. Taxation is another issue, at a recent IPT event for we discussed a piece of legislation on taxation of empty office space. This law is absolutely crippling for businesses that have empty office space. We have heard that in areas such as the North of England, where Government put money in to regenerate these areas and encourage the building of new offices to help businesses start up and grow, these office buildings are now empty, but because the tax is so crippling for the businesses, they are now pulling the buildings

down to avoid taxation! What are we going to do when the economy rejuvenates again and we have no office buildings in these areas? The problem with legislation and particularly burdensome regulation is that sometimes the consequences are just not thought through.” 20. At a recent IPT event, the question of cash flow and lending dominated and bank clearance dominated the debate. However when I was starting my innovative new business, I was told that the best funding I could get was to get customers to buy and keep buying – with the current restrictions on marketing law such as CTPS, FPS, Mps and the cost surrounding businesses, do you think that these issues should be highlighted to MP’s and laws relaxed to allow businesses to be more proactive and fertilise the economy?

“Well, yes, extrapolated out, potentially, we won’t be able to talk to each other in

business, which would be a significant issue in terms of growing a business. If you take the law surrounding junk mail, most people take the law and operate correctly, but most laws do have loopholes. I am not aware of any marketer sitting down with MP’s and explaining this and you have to take into account that 87 per cent of MP’s have not business background and they are of course, consumers and customers just like the rest of us, so they have their own experiences and opinions. But they also have to take into account that businesses are an unpaid servant and tax collector of the Government!”

21. How important do you think that lobbying is on the matters of marketing law?

22. In your experience do you think that marketers lobby well if at all? “The problem here is the corporate affairs people or Government affairs people. I certainly have never had a marketer talk to me about the impact of marketing law – the

only time I have ever been contacted by a marketing person ever, was a product



marketing person. I certainly do not think that marketers lobby in the slightest and the problems companies face implementing legislation is massive and when there are revisions or changes to the legislation either because of lobbying groups or because the

law has not been that clear, the companies face huge costs in meeting their obligations of compliance. Take, for example food labelling- there is so much food labelling now that we cant even read it because there is so much of it! This is a huge cost to businesses every time they need to make changes. Marks and Spencer spend millions meeting their obligations such as now having to put all the labelling in multiple languages. As food businesses say, we don’t mind being told what to put on the packaging, but we need some consideration and consistency in how we do it – meaning that the cost to make changes that are not originally well thought through by legislation and lobbyist are

costing the food industry a fortune, which will only end up being passed onto the consumer. There is now even talk of every bottle of wine to be labelled that the item contains alcohol, stating that alcohol may impair your judgement – as if we don’t know that. It is getting ridiculous. Often it is about MP’s making an impact and putting their name against something so that they are known for a specific point of legislation. For example, Gordon Brown’s fiscal policy for Great Britain – Gordon Brown wants to be known for being prudent in this policy. Tessa Jowell wants to be famed for her Olympic policy, which most probably will back fire, as the logo is made so difficult to use and the

laws surrounding the Olympics are so strict, in fact, too strict and not beneficial for the Olympic brand. MP’s can make up their own specific laws relating to a significant project such as the Olympics and we have little or no say in the matter. This brings me onto Gold Plating, which basically the UK has got completely wrong! Brussels makes a good and serious effort when putting a piece of legislation together, then it leaves the European Parliament to go to the different countries – when it arrives

in France, the French shrug their shoulders and don’t really bother to implement it, however, when it comes to the UK, it is taken by the Civil Service and used on a regional and local basis and Gold Plated, which means they make significant changes to it, to match what they believe it should be used for. When the legislation is implemented it bares no similarity to the original legislation – then the Civil Servants blame the legislation that they have revised to suit their own interpretation or egotistical need on Brussels, saying that it is European Legislation. “

23. What do you think the future holds for businesses with changes in marketing law?

24. How do you think businesses have changed their communication methods if at all?

“I think that they have been forced to change in many ways. For example, take the small businesses like the corner shop or small manufacturer run by an engineer – these

owners are less likely to know about marketing communication and the laws that exist around them. They may know about how to get someone to write good copy for them, but may not think to get the copy or offer they want to communicate checked for legal compliance, which can leave them exposed. Also, health and safety laws have changed things so significantly that work experience placements for age 16 plus has seen a big drop in businesses offering this age group work experience. Detailed legislation about this age group working with a till in a shop states that they can not operate a till because if they bent down to pick something up and the till drawer was open, they could bash their head on it and if a child falls at injures themselves whilst on work experience, the employer can be liable for very high fines. Legislation for cigarette and tobacco companies in terms of labelling and advertising is extremely onerous, because of the labelling laws and laws around smoking, they have no space to put any communication about their organisation – all they can put is negative communication about smoking and soon they will have to put pictures about

lungs covered in nicotine. How many companies would accept such a negative form of



communication about their product? Companies in this market have some of the most detailed and best CSR policies in industry.”

25. Do you think marketing laws have reduced the ability for businesses to gain more new business?

26. Do you think marketing law should be in the domain of the lawyers or the marketer – what responsibilities do you think each should have?

27. What level of awareness do you think marketers have about the marketing laws?

“Large companies such as Tesco, are very aware of the laws. They even use grey areas of the law, whereby they use loopholes such as gaining tax benefits for making charitable donations and collections, when all they do theoretically is put certain charities boxes by the tills and collect money from their customers for the charity, so in effect, they are simply collectors rather than the donators. Tesco will of course argue and rightly so, that if it were not for their stores presence and their decision to put collection box in front of their customers, there would not be any opportunity for a charitable donation.

However, the average SME will, in the main, be unaware of most of these laws as they generally just managing to keep their heads above water and balancing their books. At the IPT, we run training programmes and bring businesses into the House of Commons so that they can get a better understanding of how things work and to bring them more awareness on these matters. Conversely, we also bring MP’s into businesses, so they can have a greater appreciation of the challenges that SME’s face. SME’s just really do not have the time or resource to always comply accurately. An example to illustrate this

is that the head of consumer banking at HSBC told me, that 80 per cent of their time is spent on how to comply with European Legislation and making sure they know what legislation is coming along. If you wanted to set up a small financial company, it would be very difficult for an SME to manage the need for compliance, as they just would not have the resource to deal with these issues.” 28. How do you think these laws effect the small businesses – what impact will these laws have?

29. What is your opinion on the current availability of information on marketing law/training courses for marketers?

30. Do you think the Government could do more? If so what would this be? “I think the point to consider here, is that not only should Government understand business, but also businesses should really understand how Governments work. We had an MP, who came and did a presentation to one of our groups at the IPT training

programme and he brought his in tray for the day, as an example of what they receive. The in tray ranged from annual reports sent in by companies, to notes with little or no explanation as to what they were about. Then the MP selected one item that was clearly documented as to the issue and laid out in a way that was clear and easy for the MP to understand exactly what the issue was. So businesses really need to understand better how they can help MP’s help their business.”

31. If you could change anything about marketing the law, what would this be? “Changes can cost businesses a lot of money and are often not thought through – a good example of this would be the licensing law and now the proposal that public houses should provide the option of a small glass of wine. Are we really going to tell all public houses that they must be compliant to this? Constant changes that are not thought through, cost businesses money and this are not often highlighted.”



32. Do you think the laws are realistic in terms of enforcement and marketers ability to comply?

33. Do you think the data protection law that was originally brought in to protect consumers is appropriate for the business community – TPS/CTPS – how do you think this impacts on UK PLC?

34. Any other comments? “Yes, I think that we have some bad laws in the UK and really, the consequences and repercussions are just not thought through and it costs businesses and the taxpayer

money. Do you know the subject that MP’s got the most letters about last year? It was the subject of the tail docking of dogs – when you think of all the issues facing the country; it is when well-organised groups lobby.”

Sally Muggeridge – REVISED RESPONSES TO THE QUESTIONS, February 2009

1. In your capacity as CEO of IPT what has been your experience with laws affecting marketing?

“Actually, with other subjects moving up the political agenda there haven’t been that many laws affecting aspects of marketing in recent memory. We usually get involved in proposed legislation only to the extent of trying to make MPs better understand the possible impact and ramifications of proposals. Usually proposed changes in the law start with a perceived problem, generally alerted by the media, for example ‘junk mail’. MPs then think it is a problem that needs to be halted or controlled, so they draft legislation against it. The problem is that they legislate against a minority who are doing things badly and instead affect the majority who are doing things well and also pay

somewhat better heed to the laws of the land. Laws tend to be reactive. It often starts with an MPs constituents getting up in arms about something, inducing the MP to get up in arms, and then the whole of Parliament gets up in arms. Unfortunately what happens in practice is that in the process, not all the real issues and consequences are thought right through and we therefore get laws that are fundamentally flawed – a classic example of over-hasty reactive legislation would be the Dangerous Dogs Act.”

“Coming back to marketing, at the IPT, we have a Marketing Programme that was

developed with Bradford University and through this we introduce MPs to the principals of marketing. Thereby MPs can have better knowledge with which to judge issues if and when they are raised, and have a good understanding of the importance of marketing within business and the vital role that it plays.” “It is important to know, that every time legislation is proposed and goes through, an impact review will be conducted and is available for discussion for interested parties to

add comments. One can sign up for this on the European website and make comment on proposed legislation. However, in the UK this is not done so well and is not so easy to make comment on proposals, as the legislation could equally start off in the House of Lords or House of Commons. On 3rd December we have the Queen’s Speech and the State Opening of Parliament. The Queen presents what her Government is going to do for the next 12 months, along with a long list of topics that Government will deal with. Companies and institutions have a responsibility and an obligation to raise issues when legislation is proposed which directly affects them. They should push for their MPs to properly understand the challenges they face. Furthermore, they should always maintain a relationship with their own MP as they never know when they will need help. Having a good relationship with your elected representative ensures that he or she will have a good understanding of the business issues faced by their business community. The MP is therefore better briefed on supporting these matters.”



2. Often burdensome regulation is reported as being in areas such as health and safety etc – how burdensome do you think marketing laws are on businesses?

“Yes, regulations in the UK are very burdensome for some businesses. UK businesses tend to be extremely diligent in the way they approach and comply to these regulations. A – the company has to put newly legislated practises into place and B – MPs don’t understand how extraordinarily burdensome changes to regulation can be for business, particularly SMEs. What is important to recognise is that regulations affect all areas of business. For example, legislation relating to direct marketing will ultimately impact all areas of business from employment law to general day to day marketing activities. So, when a business has organised its business model to meet with existing regulation,

then a further regulation comes into practise, they have more and more burdensome issues to deal with often affecting other businesses with which they work. There is certainly misconception in this area and real dichotomy in what MP’s and businesses believe to be a problem. IPT undertook a survey of 500 businesses and 9 out of 10 businesses thought regulations were a tremendous burden in contrast to just 3 out of 10 Parliamentarian s who thought likewise. There is a huge difference between what business thinks and what MPs and Peers think.”

“Taxation is another issue. At a recent IPT event we discussed a piece of legislation on the taxation of empty office space. This law is absolutely crippling for businesses that have unused space. We have heard that in the North of England, where Government put up money to regenerate these areas and encouraged the building of new offices to help businesses start up and grow, these office buildings are now empty and perversely because the tax is so crippling for the businesses they are now pulling the buildings down to avoid taxation! What are we going to do when the economy rejuvenates again

and we have no office buildings in these areas? The problem with legislation and particularly burdensome regulation is that sometimes the consequences are just not thought through.”

3. At a recent IPT event, the question of cash flow, lending and bank clearance dominated the debate. However when I was starting my innovative new

business, I was told that the best funding I could get was to get customers to buy and keep buying – with the current restrictions on marketing law such as CTPS, FPS, Mps and the cost surrounding businesses, do you think that these issues should be highlighted to MPs and laws relaxed to allow businesses to be more proactive and fertilise the economy?

“Well, yes, extrapolated out, potentially, we won’t be able to talk to each other in business, which would be a significant issue in terms of growing a business. If you take

the law surrounding junk mail, most people operate the rules correctly, but recognise that most laws do have loopholes. I am not aware of any marketer sitting down with MPs and explaining this and you have to take into account that 87% of MPs have no background in business. However, they are, of course, consumers and customers just like the rest of us, so they have their own experiences and opinions. But they also have to recognise that businesses operate as unpaid servants and tax collectors on behalf of the Government!”

4. How important do you think that lobbying is on the matters of marketing law? 5. In your experience do you think that marketers lobby well if at all? “The problem here is the corporate affairs people or Government affairs people. I certainly have never had a marketer talk to me about the impact of marketing law – the only time I have ever been contacted by a marketing person, it was a product marketing person. I do not think that individual marketers lobby in the slightest and the problems

companies face in implementing legislation is massive. When there are revisions or



changes to the legislation, either because of lobbying groups or because the law has not been that clear, the companies face huge costs in meeting their obligations of compliance. Take, for example food labelling- there is so much now that as consumers

we are not even able to read it because of the quantity of information! It is a huge cost to businesses every time they need to make changes. Marks and Spencer spend millions meeting changing obligations particularly as there is the need to label in multiple languages. As food businesses say, “we don’t mind being told what to put on the packaging, but we need some consideration and consistency in how we do it” – meaning that the cost to incorporate changes that were not originally required by civil servants or Parliamentarians and those studying the legislation or external lobbyists, costs the food industry a fortune and these costs only end up being passed onto the consumer.

There is now even talk of every bottle of wine being required to be labelled stating that alcohol may impair your judgement – as if we didn’t all know that! It is getting ridiculous. Often it is about individual MPs desiring to make an impact and putting their name against something that ensures they are known for a specific point of legislation. For example, Gordon Brown’s fiscal policy for Great Britain – Gordon Brown wants to be known for being prudent in this policy. Tessa Jowell would wish to be accredited for getting the Olympics under her watch. Most probably this will backfire as the logo is made so restrictive to use and laws surrounding the Olympics are so strict,

in fact, too strict and not beneficial to promoting the Olympic brand. MPs can make their own specific laws relating to a significant project such as the Olympics and we have little or no say in the matter. This brings me onto “Gold Plating”, which is an area where the UK has got it completely wrong! Brussels makes a good and serious effort to put a piece of legislation together. When it leaves the European Parliament it is sent to the different EU countries for

implementation – when it arrives in France, the French shrug their shoulders and don’t really bother to implement it. However, when it comes to the UK, it can be taken by the Civil Service and effected on a regional and local basis and Gold Plated, which means they make significant “improvements and embellishments” When the legislation is implemented it bears little similarity to the original EU legislation – however, Civil Servants can put the blame on Brussels, saying that it is European Legislation!”

6. What do you think the future holds for businesses with changes in marketing law

7. How do you think businesses have changed their communication methods if at all

“I think that they have been forced to change in many ways. For example, take a small business, such as a corner shop or a small manufacturer run most probably by an engineer. These owners are less likely to be experienced in marketing communication, copyright and the other laws that exist around them. They may get someone to write

good copy for them, but may not think it necessary to get the copy or offer they want to communicate checked for legal compliance. This can leave them exposed. Health and safety laws have changed things so significantly that work placements for age 16 plus has seen a significant drop in businesses prepared to offer this age group work experience. For example, a young person in a shop may be unable to operate a till because should they bend down to pick something up and the till drawer was open, they could bash their head on it! Legislation for cigarette and tobacco companies in terms of labelling and advertising is extremely onerous, perhaps with due cause. I am not a supporter of smoking and a non smoker. However, due to labelling laws for the industry, there is little or no space permitted to even provide details of their organisation on a packet of cigarettes – all that is permitted to be portrayed is totally negative and soon these companies will be obliged to include pictures of diseased lungs covered in tar and nicotine. Few companies

fortunately are required to accept such a negative form of communication about their



product. Companies in this market have some of the most detailed and best CSR policies in industry but this does not, fortunately, assist their cause.”

8. Do you think marketing laws have reduced the ability for businesses to gain more new business

9. Do you think marketing law should be in the domain of the lawyers or the marketer – what responsibilities do you think each should have

10. What level of awareness do you think marketers have about the marketing laws

“Major companies are very aware of European laws and seek to abide by them. In

contrast a SME may well be unaware of most of these detailed laws as they try to keep their heads above water and to balance their books. At the IPT, we facilitate training programmes and bring business executives into the House of Commons so that they may gain a better understanding of how legislation works and raise their more awareness Conversely, the IPT places MPs into businesses so they can gain a greater appreciation of the challenges that small business faces. SMEs do not have the time or resource to always comply with laws accurately. For example, the head of consumer banking at HSBC advised me that some 80 per cent of his time is spent on ensuring

compliance with European Legislation, also making sure the organisation is aware of legislation that is coming along. It would be very difficult for an SME to manage all aspects of compliance, they would be unlikely to have the human resource to manage these types of issues.”

11. How do you think these laws affect the small businesses – what impact will these laws have

12. What is your opinion on the current availability of information on marketing law/training courses for marketers

13. Do you think the Government could do more? If so what would this be “I think the point to consider is that not only should Government and Parliament understand business, but also businesses should really understand how legislation works. A MP came and did a presentation to one of our groups. He brought with him his ‘in tray’ for that day, as an example of what he receives on a daily basis. The mail he

received ranged from thick Annual Reports sent in by companies, to notes with little or no explanation as to what message was trying to be conveyed. The MP was able to select only one item that was clearly documented and presented in a manner that was clear and easy to understand and adequately conveyed the issue. Businesses really do need to understand better how to convey their messages to MPs.”

14. If you could change anything about marketing the law, what would this be? “Changes can cost businesses a lot of money and revisions and changes are often not thought through well by those who legislate. An example of this would be the licensing law and the proposal that public houses should provide the option of a small glass of wine. Will all public houses really have to comply with this? Continuous changes that are not thought through cost businesses money.”

15. Do you think the laws are realistic in terms of enforcement and marketers ability to comply?

16. Do you think the data protection law that was originally brought in to protect consumers is appropriate for the business community – TPS/CTPS – how do you think this impacts on UK PLC?

17. Any other comments? “Yes, I think that we have some ‘bad’ and inappropriate laws in the UK. The consequences and repercussions are just not thought through and these cost

businesses and the taxpayer money.”



--o0o—

Interviewee: Roger Alexander Title & Position: Chairman Lewis Silkin (Legal Firm) Interview date: 18th August 2008

Position Chairman; acts for a raft of Marcom clients both public and private, UK and overseas, on flotations, acquisitions, disposals, mergers, joint ventures, corporate governance, and senior executive issues.

Career Articled Lewis Silkin; qualified 1965; partner 1965; first

head of corporate department, lead partner 1989-98; senior partner 1999; Chairman 2005; Director Walker Books Ltd; London String Quartet Foundation; Central School of

Speech and Drama

1. Do you think marketing law should be in the domain of the lawyers or the marketer? If so, what responsibilities do you think each should have?

“Sometimes it amazes me the way in which companies enter into contracts. For example, sales people draw up the contracts or work from existing contracts, which they vary for a specific client and do so without really understanding what they are writing. However, by and large it works and if businesses only used lawyers to draft each and every contract, we would have to double the lawyers the number of lawyers in practice and industry would grind to a halt! So we have to have some happy medium,

things may not be as perfect as they could be in this respect but on the whole it works okay. Lawyers should be involved in structuring transactions and in giving advice but not involved in day-to-day issues within the business. But if you take a situation such as the BBC and channel 4 telephone vote rigging, they had no rigorous systems in place to comply with the legal requirements and in this case, the lawyers should have been involved in the structuring of the systems within the business set up.”

2. What type of businesses does your firm work with – small or large? “A mixture.”

3. What is your opinion on self- regulation/co-regulation in relation to statutory regulations?

“Europe looks at self-regulation and businesses and thinks that this is mad that businesses can self regulate, it does not seem to understand the concept. However, the UK has been self-regulating very successfully for years. For example, The Take Over Code has been self-regulating for over 40 years now and with options such as black balling it has worked extremely well, it is incredibly successful. On a few occasions when people have broken the rules, all the associated lawyers, accountants and brokers have resigned from the project, this then puts the company in an impossible position. This system has stood the test of time, it is very British and it has worked. The advertising industry is self regulated, some decisions have not been that good, but by

and large it has worked. For example BA V Ryan Air on a recent advertisement



campaign Ryan Air included BA**STDS and a number of comparative fair claims within their advertising campaign. BA complained and it was upheld by the ASA, so then Ryan Air ran something even more outrageous. BA went to the Courts rather than back to the

ASA and lost a long battle and it cost them a fortune without any remedy. So self-regulation used properly can protect fair advertising and self-regulation does work very well.”

4. How do you think current marketing law affects businesses’ decisions to communicate with each other?

“I don’t think that the law will affect communications as we have highly talented

marketing people in agencies who know the rules. We as lawyers can tell them the rules and then they will work out how to communicate within the laws. We have such highly talented creative people so they will always find appropriate ways of putting across a message. A good example would be a French book that had been written about the Germans were doing in France during the war, called La Peste (the plague), which was based on an analogy to explain what was happening. This was great creative communication, which went under the radar of German understanding, and thus creativity always gets around restrictions, even in the most difficult times.”

5. What’s the no1 problem you think that businesses face in light of marketing law?

6. How do you think these laws effect the small businesses? “It is difficult for the small business, as by and large, they get advice from external sources which tends to be prohibitively expensive, or they look for information on

Government websites, which might have quite good content, but difficult to find the information that they need. Therefore, they have a real problem ensuring small businesses comply with the laws and regulations and this could get the small business into trouble.”

7. What are law firms doing to help the small business? 8. Do you think it is the responsibility of law firms to lobby parliament on marketing laws – is it in their best interest?

“It is in the interests of law firms to lobby to serve the best interests of the community. Law firms actually benefit most from business activity, with fewer laws, it means that there is more business activity, therefore more laws are not necessarily in the best interests of law firms. The only exception may be employment lawyers, who will probably benefit from more business relating to new and continued legislation. As lawyers we have lobbied Parliament before on legal issues relating to business.”

9. Do you think data protections TPS and FPS email marketing law is a good thing?

“Yes. It is important for people to have a choice of who contacts them and in what circumstances. If I am in my home and my number is ex Directory and the person is not a friend or a relation, then I think that contacting that person in their home by telephone for the purpose of selling goods is an unfair infringement of my privacy.”

10. What do you think the future holds for businesses with changes in marketing law?

11. What level of awareness do you think marketers have about the laws? “Low, very low generally.”

12. What do you think can be done to raise awareness?



“There are a fair number of courses for people to take and legal advisers run workshops with clients and this type of thing needs to be done with good effort and consistently to have a reasonable impact.”

13. What is your opinion on the current availability of information on marketing law/training courses for marketers?

14. Do you think the Government could do more? If so what would this be? “Yes, Government do a lot, through websites. Although what they do is difficult to find and there is a limit to what can be done. People – marketers and businesses have to take responsibility and large organisations have some fantastic quality people. We have

some of the world’s biggest marketing organisations in the UK, with in house lawyers specialising in marketing, but ultimately it is a question of resource.”

15. If you could change anything about marketing law, what would this be? “I would change the appeal system from the ASA. I would like the opportunity to have a proper appeal system in relation to the making of television filmed commercials. At the moment, if the ASA decide that the film should not run, all they have for what they call

an appeal system is a Government type approach where by there is simply a tick box review form that they fill out, as opposed to a proper appeal process.”

16. Do you think the laws are realistic in terms of enforcement and small business/ marketers ability to comply?

“By and large, the laws are not enforced and data protection is a prime example of this

and is rarely enforced. The number of laws and the complexity of the laws make it difficult for businesses to comply and not realistic. The laws have not been framed with the SME in mind and need to be realistic. A one-page information sheet with dos and don’ts should make it easier for SME’s.”

17. How important do you think that lobbying is on the matters of marketing law?

18. Do you think the Data Protection law that was originally brought in to protect consumers is appropriate for the business community?

“At work, I receive all kinds of email that has nothing to do with my work and me and it is a real pain in the backside and I think that reflects on how most people feel and it is probably overkill in terms of the communication. What you end up with is a system, which was intended to protect the small businessperson and used by corporates who received the best advice.”

19. Do you think protection of the recipient is at the cost of the marketing benefit to the business and thus impacts the UK GDP?

“When you look at the general response rates from communication such as email marketing, there is only a 2-3% response rate anyway. So if that were increased to 20% it would not make a huge impact on a business. The response rates have always been low. People have got to be inventive about how they communicate. I spend 15 minutes per day unsubscribing to emails and if the downside of this is that British businesses cannot approach or contact another business, then so be it. All of this is about balance. Data lists nowadays tend to be of very poor quality and irrelevant material is often sent and received using these lists. NOTE – authors research show different stats and comments that an increase in response rates to 20% would potentially make a huge difference to any company and especially the small business.”



20. Given the current laws, what do you think are the marketers best tools to market business to business?

21. How has your firm been affected by these laws – increase in business – what type of businesses?

“Overall, yes we have seen an increase in business but I cannot be more specific than that.”



--o0o--

Interviews: LBM Direct Marketing Ltd

Interviews date: 11th September 2008

Established in 1996, LBM designs and delivers complete integrated marketing solutions for major B2B and B2C brands throughout the UK.

We employ approximately 2,000 staff across seven sites. As the fastest-growing marketing services business in the country, LBM offers award-winning products and services: everything from prospect data and marketing strategy insight to the full range of contact activity and comprehensive direct marketing programmes. The key industry sectors we serve include telecoms, utilities, financial services, media, automotive and retail. LBM is a member of the Call Centre Association, IDM and the Direct Marketing Association, and holds a number of prestigious accreditations based on the innovation and implementation of quality programmes.

Interviewee: Richard Payne-Gill Title & Position: Sales Director

A senior sales and marketing professional with over 20 years experience. Richard held senior sales roles at BP before moving into the direct marketing industry eight years ago first with Dun & Bradstreet and more recently LBM where he was appointed Marketing & Insight Director before moving to his current role as Sales Director. Richard is a recognised expert in B2B marketing and is often cited in industry journals.

Interviewee: Khurram Akram Title & Position: Head of Business Improvement

A Senior Manager with over ten years of experience in managing business processes and in leading various support functions including quality assurance and compliance for large blue chip multi site operations in an international environment. Khurram has a proven track record of delivering successful projects within tight deadlines and to budget.

1. As the largest outbound call centre in the UK, what challenges are you facing in terms of calling both consumers and businesses?

2. What type of customers do you have – what is your target audience?

“Our client base is both B2C and B2B, though biased towards B2C in for our call centre business and B2B for data. In our call centres we work for a small number of very large blue chip accounts providing an outsourced telesales capability (both outbound and inbound), we also offer a bureau service for smaller campaigns.”



3. How has data protection law affected your company/business activities? 4. How has TPS, FPS, MPS and any other direct marketing laws affected your business?

K. “One of the other issues here is the consumer TPS registration process, once a consumer is added onto the register, they stay on the system as registered permanently – for life! The corporate TPS is different with an annual renewal process. R. Our percentage of calls to consumer and corporate tend to be around 70% consumer 30% corporate, so the biggest problem we face is with the consumer side of things.”

R. “The value of MPS is a mystery. Clearly there is an environmental angle but the real problem is with the door drop industry as they are unregulated and non-targetted. They also represent the vast majority of “junk mail”. However, to date Government is not distinguishing between the Direct Marketing industry and “door droppers”. We are seen by them and the public as one and the same. which is why support measures designed to stop door We recommend that our clients mail specific and appropriate propositions to a carefully targeted audience. Indeed, we practice what we preach using our analytical team to identify prospects most likely to respond to our contact, analytical

and data services – this lowers our direct mail volumes and increases our marketing ROI.”

5. Are your data lists increasing or decreasing since the introduction of direct marketing laws? Either way, what is the percentage of increase or decrease opt outs you have experienced in corporate TPS?

“Data lists are decreasing although the rate of decrease has declined..”

6. Have you noticed a difference in the quality of the data? (i.e. LBM cold called myself and I am not really target audience as a micro business in relation to the cost of LBM data, therefore, do you think quality of data is being diluted as companies are simply calling those businesses who are not registered on corporate TPS in the hope that they will have a need rather than being able

to target those with a need – thus are audiences becoming more difficult to target and ROI reducing for companies as a result of corporate TPS)? Am I the target market?

R. “Yes, although your potential spend is relatively low you are in our target market for our web or telesales channels. As someone who has shown an interest in purchasing data, we would want to talk with you especially to assist you in making an appropriate selection of data from the website.”

7. Have you noticed a difference in consumer and business attitude to your company’s activities?

8. Has your business experienced any negative press because of your activity in the direct marketing business? If so, why do you think this is/was?

“The LBM emphasis on compliance is over and above the regulatory requirements, we are confident we lead the way . We have at times had unfair comments made on internet blogs eg. forums on cold calling, where often the information is factually

incorrect (eg. telephone numbers are listed that are not ours) or is framed in an emotive or misleading way. We have to balance the damage to our reputation with the costs associated with challenging this misinformation. Our current position is to not



respond, this is extremely difficult at times when the motivation is very much to “set the record straight” however we have to make an objective business decision based on costs to defend versus perceived damage to our reputation.”

9. Do you think that think that there is good awareness among businesses about direct marketing law?

10. How are the direct marketing laws in areas such as opt in / opt out affecting your businesses and your competitive position? (This question relates to comments about BT allegedly using covert opt out methods to compete)

11. As a Group Marketing Director, how much harder/smarter do you think your company (and companies in your industry) is/are having to work to keep the balance between increase in sales and compliance?

12. Have you seen the companies revenue/profits increase/decrease as a result of direct marketing laws? – What has the result been? Have you had to differentiate?

13. Have you or your company ever been involved in lobbying at a parliamentary or EU level against the direct marketing laws? If not, would you consider it valuable for your company and industry?

R. “Although LBM has a large number of staff, I think we are too small to lobby directly. Institutes lobby directly but I don’t think that the issues are grave enough for us yet to get together with competitors and lobby.”

14. Does LBM have a legal department?

R. “No, we have an in-house compliance team and we outsource any specialist requirement.”

15. What is the responsibility of your Head of Compliance? What are challenges? Day to day activities? How do you overcome problems? Have

you been specifically trained for this role (i.e. do you have a law degree)? Do you have a team assisting you? How do you perceive the future of your role? How do you interface with the marketing department? How do you distinguish between your role/department and the role of marketing department in relation to marketing law? Do you have complaints, if so, what is the general nature of complaints in respect of dm law (are there more so than others)?

K. “I deal with compliance, quality and regulatory issues such as FSA, data protection Ofcom and DMA. My department is also involved in implementing best practise standards such as ISO9001 (Quality Management), ISO27001 for (information security), ISO14001 (environmental management) and Investors In People accreditation.

LBM have a comprehensive quality management process that adds real value to our customers and gives them the assurance that all aspects of their brand values / brand identity are reflected in the contacts that we make on their behalf. Our quality management is carried out by a completely independent department which feeds back to the operation identifying areas of improvement and risk as well as highlighting best practice so that it can be adopted across the estate.

All levels within the operation are targeted with the delivery of quality and key caveats are in place to ensure compliance. Agents, Sales Managers and Call Centre Manager



commissions are all impacted by quality scores, this we believe is key to the culture where all levels take ownership of quality and nurture an ethos of customer focused solutions.

We design bespoke quality guidelines for each of our clients to ensure that brand specific issues are taken into consideration. Our Compliance team have a clear understanding of the legislation that is in place to govern contact centres and they will liaise with our clients on a regular basis to ensure that LBM and the client are aligned to this legislation and are subsequently protected from risk.”

16. What competences do you need for your role, do you need/have a legal qualification?

K. “I have a degree in business and commerce and 10 years experience in my field, so it is about hands on experience on the job, which results in extensive knowledge of the subject and continual professional development in terms currency of information comes from the Internet in terms of forums, newsletters, email alerts and attending seminars and workshops. I believe because of our competence in this area that we are ahead of

our competitors and ahead what is required as a standard as guidance in this area.”

22. How do you interface with marketing dept? K. “My team provide direct support as and when required, this could be to deal with specific compliance issues that may arise from time to time or in a more general way when Marketing need input on communications (in various forms eg DM, web site, sales collateral) which emphasis our strength in all areas of compliance relevant to our Contact or data buying clients.”

17. Does the marketing department and legal department ever disagree or have conflicting opinions of the interpretation of the guidelines – if so, can you give and example and how this was resolved? (trying to ascertain if law and guidelines written down are clear for both parties)

18. What challenges do you think lie ahead for your industry and how do you think these can be overcome (reversal of laws or self regulation etc – who

do you think should take responsibility for these changes)? 19. Do you think that marketing law should be the responsibility of the lawyer or marketer on a day-to-day basis?

R. “A corporate lawyer is the last resort. We always handle from both the marketing managers AND the compliance managers perspective, in fact, we are overly cautious in this area. We have enough knowledge internally to deal with the vast majority of compliance issues, we use external advisors in exceptional circumstances only. I think it is rare nowadays for a company to have an in house legal team, even in our

sector where there are severe penalties for failing to comply with relevant legislation. You need to have a good grip as to the relevance of the law and the business you are in and to have access to good external guidance when exceptions require.”

20. How do you think marketing law affects business decisions to communicate with each other?

21. Do you think that businesses have changed their communication methods since the Data Protection Act, TPS. FPS and MPS and direct mail laws?

22. What level of awareness do you think that marketers have about marketing law?

23. How do you think that marketing law affects the SME? Do you think this is different to that of the large business? If so why?



“Our call centre client biased towards B2C with a number of large blue chip accounts accounting for the majority of our business, our data business is more B2B orientated and B2B data compliance is slightly different R. I don’t think that switchboard numbers

should be listed on TPS register, but direct individuals numbers I think this is more of an issue and the option of TPS is appropriate. There is a problem in that Sole traders are treated like consumers so they will be on the register permanently like consumers. We have raised the issue with the DMA and as we think this registration for the life span of a business is wrong. Further, there is a contradiction between the way the MPS register is applied and TPS. The MPS register does not block a whole address, just the individual at an address.

Therefore why should TPS block the whole phone number? It seems wrong that the receptionist of a company has the right to block the main switchboard number - there are some major corporate companies in the UK whose head office switchboard phone number are on the Corporate TPS register. Our view is TPS should work as MPS works i.e. at the level of the individual not the corporate entity. There is a balance required between rights to privacy and regulation interfering with efficient markets.”

24. That is interesting what you say about the direct dial of individuals in large corporates, if you imagine that most small businesses do not have a switchboard so hence, when they are called, people are often dialling straight into senior company members and individuals, how would you feel about this?

“A small business could get over run with calls and I accept there is a conflict of

interest here. They should have a right to be put on the register. At LBM, what we have an issue with is the permanence of the records on the TPS database and the fact that people’s circumstances change so they may at sometime want to remove themselves from the database. The vast majority of small businesses will not have an issue with this as they are not targeted, it is mainly corporates that are targeted heavily, the majority of data we sell is for those businesses with more than 10 employees. My concern would be about the small number of businesses that are over reacting and the ground swell from the consumers right to screen out calls. On our

files only 50k of active B2B files are screened out because of Corporate TPS but 460k our active file is screened out because they are non-incorporated businesses that appear on the TPS register. We are not aware of a mechanism by which the non incorporated business can de-register their details, we think that all businesses regardless of legal entity should go on the register for no more than 12 months as opposed to a lifetime. Also, one individual can freely register another individual! So any person could add another person to the register without their consent. It’s about

a balance between intrusion and free commerce and currently the benefits of the economy are not really taken into account. The assumption appears to be that all direct marketing is a nuisance when most is well-targeted (it needs to be to justify the marketing investment) and offers benefits to all businesses – eg. what business right now would not be interested in a proposition that reduced their costs, if they are on the TPS register they are less likely to hear about it.”

25. What is your opinion of the current availability of information and training for businesses and the marketer relating to marketing law?

26. Do you think information and training can be improved? If so, how? 27. Do you think that the Government can do more? 28. If you could make changes to these laws, what would they be? 29. Do you think that the laws are realistic in terms of enforcement and the ability of the business and the marketer to comply with the current level of awareness?



30. Has LBM experienced any enforcement issues? 31. What guidance on this subject do you provide to your clients? Do you have copies of these?

32. Do you have internal policy guidelines for staff on the subject of DM law? 33. Do you think the protection of the recipient is at the cost of the marketing benefit to the business and ultimately impacts on UK PLC GDP (here I am trying to ascertain if by restricting freedom of conversation between businesses, whether this reduces revenue and profit streams) – Do you think marketing laws have reduced the ability for businesses to gain more (new) business?

34. What do you understand by the term marketing law? 35. Does marketing law make your marketing communications more difficult 36. What marketing communications methods do you use? 37. Has marketing law changed the type and method of marketing communications that you use?

38. What marketing communications methods did you use before marketing law?

39. What marketing communications methods do you use post marketing law 40. Where do you get your marketing law information from 41. How do you keep informed about marketing law 42. Who has responsibility for implementation 43. Have you been trained in marketing law 44. What would help you make marketing law easier to implement/understand 45. Is there anything that you would like to add?

K. “Once a number has been registered with TPS it can not be called unless prior

consent has been obtained from the customer, but there are companies who disregard TPS rules. For example, there are lots of offshore companies working on behalf of UK based companies who do not comply with the TPS requirements. R. This conversation has got me thinking, may be it would be useful to lobby on some of these issues or invite a local MP in to see our operation and talk to our staff. We are a very large employer in our region.”

--o0o-- Interviewee: Edward Fulbrook Title & Position: Marketing Director LinkDirect Limited Interview date: 7th August 2008

Linkdirect offers numerous door to door distribution methodologies. These include Newshare, Solus, Royal Mail Door To Door, Shareplan Distribution, free newspaper distribution and Inserts with “paid for” titles.

1. How has your business been affected by marketing law?



“To a large extent, it has not been affected, there are no significant changes in numbers and our business is not particularly affected by The Telephone Preference Service, and we subscribe to the DMA’s rules and regulations. Clients have adjusted to fit in and we

have not seen a particular downturn, in fact, our business is growing. The most fundamental change we have noticed has been to do with green issues rather than marketing law in areas such as reducing wastage. This means we are using targeting and profiling, rather than a blanket approach. With the need to be environmentally friendly we have an environmental policy. Our customers are generally aware of marketing law and if they have never used a direct mailing company before, then we advise them and send information relative to their requirements. Most of our business is generated and communicated by email or

phone. We advise our client on the design of their campaign in terms of the best methods to use and ensure that they are aware of marketing laws surrounding this.”

34. How have your communications methods changed with your customers? “We get more incoming email, telephone requests and a marked increase in enquiries from the website.”

35. Have you noticed that your customers are buying different services? “Not really, although we are selling more profiling and targeting. The issues for the customers at the moment are firstly the cost, secondly the return on investment to their business, and thirdly whether they are environmentally friendly.”

6. Do you think that FPS, TPS and direct mail laws are a good thing? “Yes, I think that The Fax Preference Service is a good thing. On the issue of direct mail, when the Data Preference Service came into operation people assumed that it would only filter out “junk mail”. What they did not realise was that any mail which was not addressed to a named individual would not be received. This included what some households considered essential items such as information from their local council and their phone book! Therefore, many people decided not to subscribe to this service. You have to think about the figures relating to direct mail and door to door distribution and

put it in perspective, 74% of the adult population in the UK buy at least once per year from direct mail and door to door. This medium is an increasing phenomenon not a decreasing on. For example, I needed some new blinds and received a leaflet recently through the door giving me substantial discounts over and above what I would have got visiting a shop and so I purchased through direct mail.”

12. Do you think that marketing law should be the domain of the lawyers or the marketer – what responsibilities do you think each should have?

“I think it should be a combination of the two, but firstly it should come from the marketing side to be reviewed and then discussed with the lawyers, when necessary. The problem is that nothing is done with any real legislation or back – up in the marketing industry as most is related to self-regulation. ASA has done a good job in terms of the advertising standards although there are problems, an example is mis redemption of coupons. For example, if one receives a money off coupon for , say, 50p off Knorr stock cubes and one takes it to be redeemed in store along with the purchase of other goods, the supermarket or shop will redeem the 50p off the whole bill whether or not you have purchased Knorr stock cubes. Basically, the law and the supermarket are more interested in the customer than in the suppliers. Suppliers are therefore having to fight the supermarkets and marketing people are trying to change this but they need to go to the lawyers to enforce this.”

2. How do you think that current marketing law affects business decisions to communicate with each other?



“There are no major negatives, there are all the usual filters but generally there is the opportunity to speak to anyone you want to in any business. However, LinkDirect as a

company have signed up to the Fax Preference Service for three reasons, firstly, it is very intrusive as it arrives day or night, secondly, it costs us money because it uses up our ink and our paper, thirdly, if you want to cancel or stop the transmission you often have to pay for the premium line service that the sender is using! This is a big pain for small businesses.”

13. What level of awareness do you think that marketers have about marketing law?

“I think there is general common sense around the laws in marketing. If the marketer has a query then they can refer this to a lawyer or their trade body such as the DMA, ISP etc.. There is normally a whole supply chain involved in marketing implementation therefore often you will have a designer, printer, marketing agency etc and therefore often around 4 people are involved within the process in my industry so there is a very good understanding of what we can and can not do. We know our own areas and knowledge is good in our sector and supply chain. If we need to, as we are members of

the DMA and ISP, we can refer to their legal services department or go to an industry specialist.”

37. Do you have a legal department? “No, all of our legal work is subcontracted.”

38. What do you understand by the term marketing law? “A general term about laws relating to marketing. Not specifically relating to industry.”

39. Does your business have any written policies relating to marketing law? “We have no policies written down, We sometimes turn down literature such as extremist political propaganda, but we don’t have a list of legal requirements anywhere.

However, all our staff are hands on and both experienced and skilfully trained in the matters of marketing law requirements.”

50. What would help you make marketing law easier to implement/understand? “I think comparatively speaking, in the advertising business, a lot of it is common sense. I have been in business for over 40 years and I am still in it! I can honestly say that during this time I have experienced very few cases that have been contentious or

caused a major legal problem, so I don’t think there is anything that could really make it easier. Nowadays part of the marketing diploma in communications covers general law so younger people nowadays are given a better grounding in marketing and advertising law. Most advertising practitioners are honest and decent people, even if an advertisement offends, its often attractsa low number, so the advertising industry in the main does pretty well and far better than journalists want you to believe. However, there is a change coming relating to the door to door regulations. Currently there is no preference service in this area, but it is in the process of being set up. The problem at the moment is that the data is inaccurate so the DMA, who are organising the database have been told to go away and rethink the organisation of the data, as there are currently many errors. When this is done, we will use this service and run our data past the DMA database for cross checking. This law will only apply to the consumer not B2B.”

31. Do you find it more difficult to acquire business for your direct mail services?



“There is no change really, there are the same resources and sources, the only fall off in business we have had is from estate agents because of the current situation in the housing market. Normally we find that direct mail and door to door increases because

of budget cuts within organisations. This because advertisers look to reach their customers in a more targeted way, to reduce wastage., This often means a reduction in the use of press, TV, cinema and radio advertising budgets, as they are now very fragmented.. We also now have extremely good tools for socio economic profiling such as MOSAIC amongst others. However, I think that email and SMS marketing may cause the bigger problems for direct mail and door to door as it can also be very targeted, however at the present time it seems to be very unregulated.. I get so much spam whwn opening my computer and it is a real problem clearing out my inbox every morning and

SMS is now becoming a problem for me also with 3-5 unsolicited texts per week. There seems to be a major problem with filtering from these third party opt in databases. In fact, Link Direct purchased some data for email purposes some time ago and we used a company who provided 65 thousand marketing peoples email addresses and we used a very generous offer to entice buyers and we did not even get one reply from using this database, so either the database was totally inaccurate or the recipients spam filters took out the emails. So now we spend time being much more targeted, concentrating on just 500 targets and this produces a totally totally different response rate.. A high

proportion of emails we now receive come from, professional people trying to sell their services we do not receive a lot of B2B e-mails..”



2. Glossary

Consent

Consent is any freely-given, specific and informed indication of wishes by which the Data Subject signifies agreement to personal data being processed. In the direct marketing industry, consent to process is normally achieved by coupling this requirement with an opt-out or an opt-in statement, to provide the Data Subject with

an opportunity to prevent direct marketing approaches.

Cookie

A cookie is a piece of information that a web server can store temporarily with a web browser usually including the identity (IP address) of the user.

CTPS

Corporate Telephone Preference Service

Data Controller

The Data Controller is a person who (either alone or jointly or in common with other persons) determines the purposes for which and the manner in which any personal data are, or are to be, processed.

Data Processor

The Data Processor is any person (other than an employee of the Data Controller) who processes data on behalf of the Data Controller.

Data Protection Compliance Officer

The Data Protection Compliance Officer is an appointed individual who advises on the

implications of Data Protection law and develops the company's privacy and data protection policies.

Data Subject

The Data Subject is a living individual to whom personal data relates.

Eight Principles of Data Protection

There are eight broad rules in the Data Protection Act. These state that Personal Data must be:

• fairly and lawfully processed;

• processed for limited purposes;

• adequate, relevant and not excessive;

• accurate;

• not kept for longer than is necessary;

• processed in line with the Data Subject's rights;

• secure; and

• not transferred to countries without adequate protection.

Electronic Mail

Electronic mail includes email as well as SMS/text/picture/video marketing sent and stored via electronic means. Fax is not included.



Fair Processing

Fair Processing is the conditions which have to be met for any activity involving personal data to be lawful. Usually direct marketers fulfil this condition by providing

Data Protection notice.

Fax Preference Service (FPS)

The FPS allows individuals to register their home or business fax number so as to not receive unsolicited sales and marketing faxes.

Host Mailing

Host Mailing is the enclosing of a third party's commercial messages in promotions from the Data Controller.

List Warranty Register

The List Warranty Register is a DMA run system where list owners and users sign warranties for the supply and use of data guaranteeing good practise

Mailing Preference Service

The Mailing Preference allows consumers to register their wish not to receive unsolicited direct mail.

The Information Commissioner's Office

The Information Commissioner's Office is the Government organisation that enforces the Data Protection Act 1998 and subordinate legislation. The Information

Commissioner can issue Enforcement Notices and prosecute Data Controllers.

Opt-in

Opt-in is a statement that notifies the individual of the uses to which data will be put and asks the individual actively to agree to those uses. There is usually a tick box, which should not be pre-ticked. If the individual does tick an opt-in box, they are giving consent for their data to be used.

Opt-Out

Opt-out is a statement that notifies the individual of the uses to which data will be put and asks the individual to object if he/she disagrees. If the statement is in written or electronic media there is usually a tick box. If the individual does not tick the box, they give their consent to the uses stated.

Personal Data

Personal Data is data that relates to a living individual who can be identified.

a) From those data, or

b) From those data and other information which is in the possession of, or is likely to

come into the possession of the Data Controller.

This includes business data if there is a named contact.

Privacy Policy

Privacy policy is a publicly available document that outlines a company's intentions concerning personal data storage and use.

Safe Harbour

Safe Harbour is a scheme that allows US companies to register their intentions to comply with a set of rules agreed with the European Commission and enforced by the

Federal Trade Commission by fines. By registering, the company can have personal data transferred to them from within the European Economic Area as a way of meeting the adequacy requirements of the Eight Principle.



Sensitive Data

Sensitive Data is information covering:

• The racial or ethnic origin of the Data Subject

• Political opinions

• Religious or other beliefs of a similar nature

• Membership of trade unions

• Physical or mental health or condition

• Sexual Life

• The commission of any offence or criminal records

Sensitive data must be collected using an opt-in and should be carefully handled. Other classes of data which might be regarded as sensitive are data relating to children and financial information.

Soft Opt-in

Soft opt-in is a permission statement to be used when collecting email and SMS details. In practice the wording needed for a soft opt-in statement is very similar to an opt-out as the consent is achieved by the individual by passing an opportunity to object.

Subject Access Request

A Subject Access Request is a written, signed request from an individual to see

information held on them. The Data Controller must provide all such information in a readable form within 40 days of receipt of the request and may charge a small fee (up to £10).

Telephone Preference Service (TPS)

The Telephone Preference Service allows the registration of home or business phone numbers in order to prevent unsolicited sales and marketing calls

Third Party

Third Party is any legal entity or person who is not the Data Controller (including other

companies in the same group).



3. The CAP Code – Legislation listed by CAP

The following list of statutes and regulations affecting advertising and promotions relates to England and Wales and is not exhaustive; a considerable amount of legislation is always in the pipeline and cannot therefore be included. Many of these statutes are also applicable to Scotland and Northern Ireland which have their own additional legislation. In some instances EC Regulations and Directives are also

relevant. Businesses have primary responsibility for ensuring that everything they do is legal. The law on matters such as contract, negligence, libel and intellectual property should also be observed.

Accommodation Agencies Act 1953 s.1

Administration of Justice Act 1985 s.9-10 and Solicitors Practice Rules 1990 and

Publicity Code 1990

Adoption Act 1976 s.58

Agriculture and Horticulture Act 1964 s.14

Agriculture (Safety, Health and Welfare Provisions) Act 1956

Alcoholic Liquor Duties Act 1979 (as amended) s.71

Animals (Scientific Procedures) Act 1986 s.16

Architects Act 1997 s.20

Banking Act 1987 (Advertisements) Regulations (1988) (as amended)

Betting and Gaming Duties Act 1981 (as amended)

Betting Gaming and Lotteries Act 1963 (as amended) s.10 & 22

Biocidal Product Regulations 2001 s.30-33

Bread and Flour Regulations 1998 (as amended)

Broadcasting Act 1990 s.8-9, 60 & 92-93

Broadcasting Act 1996 s.14, 31 & 56

Business Advertisements (Disclosure) Order 1977

Business Names Act 1985

Cancer Act 1939 s.4

Care Standards Act 2000 s.23

Charitable Institutions (Fund Raising) Regulations 1994

Charities Act 1992 (as amended)

Chemicals (Hazard Information and Packaging for Supply) Regulations 1994

Children Act 1989

Children and Young Persons (Harmful Publications) Act 1955 s.1

Children and Young Persons Acts 1933 s.7 and 1963

Civil Aviation Act 1982 s.82

Civil Aviation (Air Travel Organisers' Licensing) Regulations 1995 (as amended)

Civil Aviation (Ariel Advertising) Regulations 1995

Cocoa and Chocolate Products Regulations 1976 (as amended)

Coffee Extracts and Chicory Extracts (England) Regulations 2000

Companies Act 1985 s.349 & 351

Competition Act 1998

Condensed Milk and Dried Milk Regulations 1977 (as amended)

Conduct of Employment Agencies and Employment Businesses Regulations 2003

Consumer Credit Act 1974 s.43-47

Consumer Credit (Advertisements) Regulations 1989 (as amended)



Consumer Credit (Exempt Advertisements) Order 1985

Consumer Protection Act 1987 s.10-12 and 20 and the Code of Practice for Traders on

Price Indications

Consumer Protection (Distance Selling) Regulations 2000

Consumer Transactions (Restrictions on Statements) Order 1976 (as amended)

Control of Misleading Advertisements Regulations 1988 (as amended)

Control of Pesticides Regulations 1986 (as amended)

Copyright and Rights in Databases Regulations 1997

Copyright Designs and Patents Act 1988 (as amended)

Cosmetic Products (Safety) Regulations 1996 (as amended)

Credit Institutions (Protection of Depositors) Regulations 1995

Credit Unions Act 1979 (as amended) s.3

Criminal Justice and Police Act 2001 s.46

Crossbows Act 1987

Dangerous Dogs Act 1991 s.1

Data Protection Act 1998

Data Protection (Conditions under Paragraph 3 of Part II of Schedule I) Order 2000

Defamation Act 1952

Defamation Act 1996

Dentists Act 1984 s.26 & 41-42

Deregulation (Betting and Bingo Advertising etc.) Order 1997

Deregulation (Casinos) Order 1999

Disability Discrimination Act 1995 s.11 & 19-22

Education Reform Act 1988 s.214

Electronic Commerce Directive (Financial Services and Markets) Regulations 2000

Electronic Commerce (EC Directive) Regulations 2002

Employment Agencies Act 1973 s.5

Endangered Species (Import and Export) Act 1976 (as amended) s.4

Energy Act 1976 s.15

Enterprise Act 2002

Environmental Protection Act 1990 s.87

Estate Agents Act 1979 s.10

European Communities Act 1972

Fair Trading Act 1973

Feeding Stuffs Regulations 2000

Finance Act 1993 s.29 & 33

Financial Services and Markets Act 2000 s. 21, 24-25, 98, 145 & 238-241

Financial Services and Markets Act 2000 (Financial Promotion) Order 2001

Firearms Act 1968 (as amended) s.3

Fireworks (Safety) Regulations 1997

Flavourings in Food Regulations 1992

Food Labelling Regulations 1996 (as amended)

Food Safety Act 1990 s.8 & 15 and Regulations

Foods Intended for Use in Energy Restricted Diets for Weight Reduction Regulations

1997

Forgery and Counterfeiting Act 1981

Fraudulent Mediums Act 1951



Friendly Societies Acts 1974 and 1992

Fruit Juices and Fruit Nectars Regulations 1977 (as amended)

Gaming Act 1968 (as amended) s.42

General Optical Council (Rules on Publicity) Order of Council 1985

General Optical Council (Contact Lenses) (Qualifications etc) Rules Order of Council

1988

General Product Safety Regulations 1994

Geneva Conventions Act 1957 (as amended) s.6

Hallmarking Act 1973

Hearing Aid Council Act 1968 (as amended)

Highways Act 1980 s.132

HIV Testing Kits and Services Regulations 1992

Honey Regulations 1976

Human Organ Transplant Act 1989

Human Rights Act 1998

Income and Corporation Taxes Act 1988 s.577

Indecent Displays (Control) Act 1981 s.1

Industrial and Provident Societies Act 1965

Infant Formula and Follow-on Formula Regulations 1995 (as amended)

Insolvency Act 1986 s.137, 216 & 296-297 and Insolvency Rules 4. 226-300

Jam and Similar Products Regulations 1981

Knives Act 1997

Licensing Betting Offices Regulations 1986 (as amended)

Licensing Act 1964 s.67 & 168

Local Government Act 1992 s.107

Local Government (Miscellaneous Provisions) Act 1982

London Cab Act 1968 s.4

London County Council (General Powers) Act 1938

Lotteries and Amusements Act 1976 and amendments

Malicious Communications Act 1988

Marine etc. Broadcasting (Offences) Act 1967

Meat Products and Spreadable Fish Products Regulations 1984 (as amended)

Medicines Act 1968 s.85-97

Medicines (Advertising) Regulations 1994 (as amended)

Medicines for Human Use (Marketing Authorisations) Regulations 1994

Medicines (Labelling and Advertising to the Public) Regulations 1978

Medicines (Monitoring of Advertising) Regulations 1994 (as amended)

Metropolitan Streets Act 1867 s.9

Milk and Milk Products (Protection of Designations) Regulations 1990

Misrepresentation Act 1967

Mock Auctions Act 1961 s.1

Motor Cars (Driving Instruction) Regulations 1989 (as amended)

National Lottery etc Act 1993 (as amended)

National Lottery Regulations 1994

Natural Mineral Water, Spring Water and Bottled Drinking Water Regulations 1999

Nightwear (Safety) Regulations 1985 (as amended)

Nurses Agencies Act 1957



Nurses Midwives and Health Visitors Act 1997

Obscene Publications Act 1959 (as amended)

Olympic Symbol etc (Protection) Act 1995

Opticians Act 1989

Organic Products Regulations 2001

Package Travel, Package Holidays and Package Tours Regulations 1992 (as amended)

Passenger Car Fuel Consumption Order 1983 (as amended)

Pensions Schemes Act 1993 s.117

Personal Pension Schemes (Advertisements) Regulations 1990 (as amended)

Plant Varieties Act 1997

Political Parties, Elections and Referendums Act 2000

Postal Services Act 2000 s.86

Prevention of Corruption Acts 1889-1916

Price Indications (Bureau de Change) (No 2) Regulations 1992

Price Indications (Method of Payment) Regulations 1991

Price Indications (Resale of Tickets) Regulations 1994

Price Marking (Food and Drink on Premises) Order 1979

Price Marking Order 1999

Private Hire Vehicles (London) Act 1998

Property Misdescriptions Act 1991

Protection of Animals Act 1911 (as amended)

Protection of Children Act 1978 s.1

Protection of Children (Tobacco) Act 1986

Public Order Act 1986 s.19

Pyramid Selling Schemes Regulations 1989 (as amended)

Race Relations Act 1976 s.29

Registered Designs Act 1949

Registered Designs Regulations 2001

Rent Act 1977 s.119-128

Representation of the People Act 1983 s.75, 106, 109-110 & 115

Restriction of Offensive Weapons Act 1959 (as amended) s.1

Restriction on Agreements (Estate Agents) Order 1970

Road Traffic Act 1988 s.135

Road Traffic Regulation Act 1984 s.35

Sale and Supply of Goods to Consumers Regulations 2002

Sale of Goods Act 1979 (as amended)

Seeds (National List of Varieties) Regulations 2001

Sex Discrimination Acts 1975 and 1986

Solicitors Act 1974 s.21

Specified Sugar Products Regulations 1976 (as amended)

Spreadable Fats (Marketing Standards) (England) Regulations 1999

Stop Now Orders (EC Directive) Regulations 2001 (as amended)

Sunday Entertainments Act 1932

Sunday Observance Act 1780

Sunday Theatre Act 1972 s.1

Sunday Trading Act 1994

Supply of Goods and Services Act 1982 (as amended)



Supply of New Cars Order 2002 s.3

Surrogacy Arrangements Act 1985 s.3

Tattooing of Minors Act 1969

Telecommunications Act 1984 s.29 & 86-87

Telecommunication Apparatus (Advertisements) Order 1985 (as amended)

Telecommunications (Data Protection and Privacy) Regulations 1999

Terrorism Act 2000 s.12 & 15

Textile Products (Indications of Fibre Content) Regulations 1986

Theft Acts 1968 and 1978

Timeshare Act 1992

Timeshare Regulations 1997

Tobacco Advertising and Promotion Act 2002

Tobacco Products Regulations 2001

Town and Country Planning Act 1990 s.220-224

Town and Country Planning Act (Control of Advertisements) Regulations 1992 (as

amended)

Trade Descriptions Act 1968 s.1 and 12-14

Trade Descriptions (Sealskin Goods) (Information) Order 1980

Trade Marks Act 1994

Trade Union and Labour Relations (Consolidation) Act 1992 s.137

Trading Schemes Act 1996

Trading Schemes Regulations 1997

Trading Stamps Act 1964

Unfair Contract Terms Act 1977

Unfair Terms in Consumer Contracts Regulations 1994

Unsolicited Goods and Services Act 1971 as amended s.4

Unsolicited Goods and Services Act 1971 (Electronic Communications) Order 2001

Veterinary Surgeons Act 1966 s.19-20

Video Recording Act 1984

Weights and Measures Act 1985

Wildlife and Countryside Act 1981 s.6

Wireless Telegraphy Act 1949



4. Websites of regulatory bodies

Regulatory bodies etc

Advertising Standards Authority www.asa.org.uk

Broadcast Advertising Clearance Centre www.bacc.org.uk

Committee of Advertising Practice www.cap.org.uk

Department for Culture, Media and Sport www.culture.gov.uk

ICSTIS www.icstis.org.uk

Information Commissioner's Office www.ico.gov.uk Medicines and Healthcare products Regulatory Agency www.mhra.gov.uk

Ofcom www.ofcom.org.uk

Recent Acts of Parliament www.hmso.gov.uk/acts.htm

UK Intellectual Property Office www.ipo.gov.uk

US Patent and Trade Mark Office www.uspto.gov

Trade bodies etc

Advertising Association www.adassoc.org.uk

Chartered Institute of Marketing www.cim.co.uk

Chartered Institute of Purchasing and Supply www.cips.org

Direct Marketing Association www.dma.org.uk

Direct Selling Association www.dsa.org.uk European Association of Communications Agencies www.eaca.be

European Sponsorship Association www.europeansponsorship.org

Incorporated Society of British Advertisers www.isba.org.uk

Institute of Direct Marketing www.theidm.com

Institute of Practitioners in Advertising www.ipa.co.uk

Institute of Sales Promotion www.isp.org.uk

International Advertising Association www.iaaglobal.org

Newspaper Society www.newspapersoc.org.uk

Promotion Marketing Association www.pmalink.org

Public Relations Consultants Association www.prca.org.uk

The Marketing Society www.marketing-society.org.uk



5. European Communities (Deregulation) Bill Proposed By Sir Paul Judge March 2003

Political Background

1. British business, like the British people, is fairly long suffering and will accept most regulations as part of the burden of living in a democratic society. However the area that most arouses their fury is when they perceive that under the cloak of

European requirements the British Government legislates in a way that is significantly more anti-business than is the case in other member states. 2. This is encapsulated in the phrase “the level playing field”. Whether it is a much publicised prosecution of a cheese producer or the regulations on road transport, it is the inequity of the British approach which generates the headlines. 3. Although it is very necessary to scrutinise existing regulations to see if they can

be simplified, a deregulation approach on its own cannot reduce the total net amount of regulation because new regulations are continually being promulgated in great detail. No amount of analysis of past laws will reduce the level of future regulation. Even regulation “budgets” are open to adulteration by departments and may prove very hard to calculate and administer.

The EU Regulatory Environment

1. The EU Treaty set out the legitimate domains of business regulation. Article 36 refers to: - Public morality - Public policy - Public security - The protection of health and life of humans, animals and plants - The protection of national treasures - The protection of industrial or commercial property

2. Article 100a, added in 1986 by the Single European Act, reflects later experience and adds: - The protection of the environment - The protection of the working environment 3. These objectives are of course legitimate but their implementation nearly always increases business costs. The countries of the EU are already expensive places in which to do business (“we pay people more not to work than many countries pay their people to work”). Every additional cost reduces the EU’s global competitiveness and potentially means that fewer jobs are maintained or created within the EU. 4. EU directives typically set out a minimum level of standards on the particular issue. However the responsibility for citizen and consumer protection is that of individual

Governments and therefore European directives have to be translated into national legislation.

UK Procedures



1. There are clear and well researched reasons why particular countries may have different approaches to the development of national legislation. In particular a confluence of circumstances means that in the UK the national legislation is normally

much more rigorous than in most other countries. 2. The body of regulation which currently exists is a result of the consensus of all of the pressures in the mature British democracy which impacted on the legislation when it was originally passed. In a democracy the people who would lose as a result of any proposed change will shout a lot louder than those who will benefit, and the former will appear on the broadcast media and in the newspapers to set out their case. The people who may be advantaged are normally much more reticent and consequently the case for

the status quo, aided by natural complacency, is broadcast more forcefully. 3. There is therefore little chance of rolling legislation back through parliamentary means unless, unusually, there has been a massive shift in popular sentiment as a result of a technological or similar change. Thus even apparently simple deregulatory changes take a great deal of time and effort (e.g. Sunday trading or public house opening hours).

4. The British system has a much greater tradition of wide consultation with draft proposals being sent to a broad range of bodies for comment. This leads special social interest groups to lobby hard for their particular concerns in using the proposed legislation to maximise their particular requirements. 5. In contrast British business units such as Trade Associations or Chambers of Commerce are often significantly less important and well organised than the equivalent

organisations in continental Europe. They are often under-resourced and lobby much less effectively than the commercial bodies in other member states who often have a strong tradition of business involvement at the senior levels of Government (official and political). 6. The tradition of UK parliamentary Government means that Ministers can easily be called to account. This is most likely to be by an MP on the basis of a hurt experienced by one of his/her constituents and is rarely because of a problem by a business.

Officials are very conscious of this and therefore ensure that regulations protect the public very much more (contrast British speed limits with the unregulated Autobahns). 7. UK Parliamentary time is scarce and it is difficult for departments to get more than a couple of legislative slots per year. The main opportunity for departmental initiatives is therefore through Statutory Instruments and the most fruitful reason for these is European directives.

8. UK Embassies in the member states do not generally have mechanisms to follow the progress of European legislation in their particular country. Their greater interest is to be friendly to the local officials and experience shows that they are very reluctant to provide information which could show that their host country was not properly implementing a directive. 9. The policing of British regulations is well established and comprehensive with a localised and non-corrupt approach. Increasingly each local inspector is appraised on the number of prosecutions he/she achieves rather than on the success of the particular sector for which he/she is responsible. 10. The UK newspapers will tend to sensationalise human tragedies more than occurs in other countries. This leads to political support for disadvantaged groups or those suffering from a particular tragedy, which can cause an over-reaction.



European Communities Act 1972

1. A particular UK concern is that of "Gold Plating" which is where the UK goes beyond the minimum required by a European directive in promulgating a UK regulation whose basis is that directive.

2. In the UK the authority for making such regulations derives from Section 2(2) of the European Communities Act 1972. This Section authorises regulations to be made for the purpose of � "implementing any Community obligation of the United Kingdom", or

� "dealing with matters arising out of or related to any such obligation". 3. This very broad power can be used to over-ride or amend existing Acts of Parliament. 4. The use of this machinery to amend the law is very attractive to officials, since the Statutory Instrument procedure is subject to much less Parliamentary scrutiny than a Bill. Therefore the use of regulations under Section 2(2) of the 1972 Act has ballooned

enormously over the years and many important or controversial changes to the law are made by this route: metrication is an example. 5. The vastly increased use of section 2(2) to make important changes to domestic law makes a mockery of the assurances which were given to the House of Commons by the Government in the course of the debates on the 1972 Act, when it was said that any important changes would be made by Bill rather than by subordinate legislation. For example, Geoffrey Rippon in the second reading debate, HC 15 Feb 1972 col 282, said:

"I fully appreciate the concern of the House at any new general power to make subordinate legislation, but I should like to reassure hon. Members about the prospect. On the basis of existing Community instruments, we foresee a need for not more than four instruments under clause 2(2) in 1972 and about another 12 in 1973." He then went on to suggest that any important changes would be incorporated in "the ordinary programme of departmental legislation.” 6. The lack of Parliamentary scrutiny to which section 2(2) measures are subject makes it attractive for officials to use this route for legislation. The lack of scrutiny makes it easier for them to load on additional obligations which impose burdens on business, be they Departmental pet projects or other matters.

Implementation

1. There have been many initiatives over the last decade to try to stem the tide of

regulation. However the burden on British business continues and, as set out above, the lack of a Level Playing Field has become even more of an issue.

2. As a result of the lack of success in stemming the amount of legislation, business representatives and trade associations have become cynical about any new initiatives. Thus although they may pay lip-service to any announcements made in this area they will not really believe that there will be a difference unless there is a really new initiative. 3. We need an approach which:

• cuts through the huge body of existing European based regulations;



• allows individual businesses a formal opportunity to demonstrate the competitive unfairness of particular regulations; and

• gives departments a real incentive to avoid “Gold Plating” of European regulations.

4. Unless there is an overriding domestic issue which is substantially different from other member states we should only be implementing European directives to the

minimum level required. Any enhancement of their provisions should take its place in the queue for time for Parliamentary legislation as a UK domestic concern. 5. We need a mechanism which ensures that the United Kingdom continues to abide by its obligations under EC law, but which would allow domestic regulations to be set aside when they added to or went beyond the EC law obligations. 6. The "defence" should be such as to be able to be invoked in civil and

administrative proceedings (e.g. when someone could be subject to having a licence taken away for allegedly breaching a regulation) as well as criminal prosecutions. 7. In addition, it should be made possible for businesses and trade associations to take the initiative and apply to the courts for a declaration without waiting to be prosecuted or proceeded against.

Proposal

1. Legislation would be proposed whereby a provision of UK domestic law made by Statutory Instrument under Section 2(2) of the European Communities Act in purported implementation of an EC law obligation could be attacked in the courts if it were shown that:

(a) it contains a provision which is burdensome to an affected person or business or to a class of affected persons or businesses or to persons or businesses generally; and

(b) that provision is not required by Community law, or the relevant requirement of Community law could have been implemented in a less burdensome way; and

(c) in one or more other Member States there is no corresponding provision or the relevant requirement of Community law has been implemented in a less burdensome way;

2. In such a case, the court concerned would have the power to grant a

declaration to that effect and the relevant UK regulation would then cease to have effect to the extent that its provisions go beyond what is required by Community law.

3. Businesses, affected individuals and such bodies as trade associations would be

able to go to court to apply for such a declaration. (The appropriate court to deal with such an application would normally, in England, be the Administrative Court which is part of the High Court). Such a declaration could also be applied for in any proceedings where someone is prosecuted or sued for breach of such a regulation or in administrative proceedings where any such regulation is enforced.

4. It should be emphasised that this "defence" would not apply in cases where the EC

law obligation had been implemented by Act of Parliament. That is because in such

cases Parliament itself would have decided what is the appropriate way to



implement the EC obligation and may have decided that the balance lies in favour of the more extensive or onerous method of implementation. If that is wrong, it is a matter for Parliament itself to reverse and not for the courts. This proposal is

explicitly directed at curbing the inappropriate and far too extensive use of the machinery of section 2(2) by Government departments to by-pass Parliament and to pile on rules and regulations which go beyond what EC law actually requires.

Consequences 1. This legislation would completely turn the tables on the legislative priorities. Rather than officials being motivated to increase regulatory requirements they would be keen to ensure that their proposals could not be overturned in Court because they went further than other member states.

2. UK Embassies in each member state would have to find out about the status of legislation in their country and feed this information back to the particular department concerned. 3. Rather than Ministers having to defend a particular piece of European derived legislation, any business which was prosecuted would be able to argue their case for fair treatment in the Courts. Undoubtedly on significant issues the major national

business bodies and trade associations would mobilise themselves as they would have a specific matter to address. 4. This would be seen as very simply defusing all of the issues relating to the legal level playing field, which is the main regulatory complaint of British business.27

27 Sir Paul Judge © March 2003



6. Regulatory Impact Assessment – Home Office 1997

DIRECTIVE 95/46/EC (THE DATA PROTECTION DIRECTIVE) REGULATORY APPRAISAL AND COMPLIANCE COST ASSESSMENT EXECUTIVE SUMMARY

Purpose 1. The aims of the Directive are:




Options 2.1 There is no option not to legislate to implement the Directive, as its requirements go beyond those of the Data Protection Act 1984. However, member states have some discretion as to the level of implementation. 2.2 The Government considers that the risks posed to individuals are not appreciably different from those addressed in the 1984 Act which was itself based on an

international standard, Council of Europe Convention 108. The use of new technology means that more data can be processed more quickly, but the Directive is intended to set a general framework which will apply whatever technology is used. 2.3 We therefore propose to give full effect to those Directive requirements which afford enhanced protection to data subjects without putting unjustified additional burdens on data controllers.

Benefits 3.1 Implementation of the Directive contributes to the Government's commitment to "bring rights home". 3.2 Data controllers will be able to trade with other EU countries, within a regime which applies to all controllers of personal data. We hope that they will welcome the

clarity which the new law is intended to bring, and that all data controllers who notify the Supervisory Authority of the processing operations which they carry out will benefit from a simpler procedure for notification. 3.3 Data subjects will benefit from increased rights, notably in respect of subject access to structured manual records. They will also have increased scope to seek compensation and other redress in the courts.

Consultation 4.1 Public consultation on the implementation of the Directive in the UK was carried out between March and July 1996.



4.2 The Government's proposals were published on 31 July 1997. They were intended primarily for information, but 74 sets of comments were received.

4.3 For the compliance cost assessment 13 organisations were surveyed in August 1996 and again in June 1997. A larger survey of 84 private and voluntary sector organisations, of which 46 responded, was undertaken in July 1997 on the basis of the Government's published proposals.

Costs 5.1 The legislation will affect all sectors of the economy. Total costs for the economy

have been calculated at £1,150m in start-up costs and £742m in recurring annual costs. Costs will fall on businesses of all sizes throughout the private sector. The compliance cost assessment shows that the measure is unlikely to have a significant impact on small businesses. There may be cost implications for some organisations within the voluntary sector. Both central and local government will be affected. The compliance cost exercise of August 1997 included a sample of government departments and other bodies.

5.2 Implementation will be phased in over three years from 24 October 1998, with a further six years for some provisions in respect of manual data. Start-up costs will not therefore all fall within one year. 5.3 There will be no direct cost implications for consumers ie data subjects.

Enforcement, sanctions, monitoring and review 6.1 The application of the new law will be monitored and enforced in the UK by the Data Protection Commissioner (formerly the Data Protection Registrar). The enforcement regime will broadly be based on the one which currently applies (ie a mixture of criminal offences and enforcement notices). There will be some stronger powers for the Commissioner. 6.2 Under current law only registered data users can be subject to enforcement for

breach of the principles. In the future the principles will apply equally to all data controllers whether they notify their processing operations or not. 6.3 Under the Directive, law and practice in Member States will be monitored by a Working Party of Supervisory Authorities of the Member States. A Committee of Government representatives and the European Commission will have a limited role in enforcement in respect of data exports to third countries.

Home Office December 1997 A REGULATORY APPRAISAL FOR THE IMPLEMENTATION OF DIRECTIVE 95/46/EC ON THE PROTECTION OF INDIVIDUALS WITH REGARD TO THE PROCESSING OF PERSONAL DATA AND ON THE FREE MOVEMENT OF SUCH DATA (THE DATA PROTECTION DIRECTIVE).

Section 1: Purpose and intended effect of the proposal 1. With the establishment of a single market imminent and in the context of encouraging the free flow of personal data, a draft Directive was introduced in 1990. The Directive itself was adopted on 24 October 1995 with the following aims:






Section 2: Options 2.1 The Government's aim in implementation is to ensure the required level of protection for individuals without putting additional burdens onto data controllers. 2.2 The Directive has to be implemented by 24 October 1998. It provides a framework

for national data protection laws and requires member states to determine more precisely how the provisions should be implemented in national law. At some points the Directive allows discretion as to the level at which protection is set, subject to a requirement that implementation should not result in a lessening of existing protection. There is no option to leave current legislation unchanged, because at some points the Directive goes further than the Data Protection Act 1984.

2.3 Council of Europe Convention 108 of 1981 on data protection established a common standard with which the 1984 Act was designed to comply. Technological innovations such as the internet and the increasingly wide-spread use of personal computers and laptops have made the means of processing personal data more widely available. It is therefore arguable that risks to data subjects have increased since 1984 when the Data Protection Act came into force. However, the Directive does not specifically address new technology. It sets a general framework which will apply irrespective of the technology used.

2.4 The risks currently posed to individuals by the processing of their data are not identifiably different in nature from those addressed in Council of Europe Convention 108 and the 1984 Act. 2.5 The main area in which the Directive differs from our current law is its inclusion of some manual records. As organisations increasingly computerise their records any risk posed by this means of processing is likely to diminish. The implementing measure will provide the additional protection required for manual records without creating unnecessary burdens.

Section 3: Benefits Benefits for the Government

3.1 Through implementing the Directive the Government will benefit by contributing to its commitment to "bring rights home". Benefits for the data controller 3.2 Implementation of the Directive will allow freedom to trade with other EU member states within a regime which applies to all controllers of personal data.

3.3 The Data Protection Commissioner's ability to enforce the data protection principles in respect of all controllers, not just those which are registered, should mean a more equitable system within the UK. 3.4 Compliance with good data protection practice should help organisations to improve their information management.



3.5 The current planning for a new system of notification is intended to produce a simpler procedure for those controllers who will be obliged, or who choose, to notify. There is some evidence from our survey that this could improve the viability of smaller

organisations. Benefits for the public ie data subjects 3.6 A stricter data protection regime should give data subjects increased confidence that their data are being appropriately handled within the UK, the EU and third countries.

3.7 Data subjects will have enhanced rights in some areas. These include:

• access to a wider range of personal data;

• more information from controllers in response to a subject access request;

• the right to object to processing, for direct marketing and other purposes;

• the right to a remedy in law and/or compensation for breaches of the principles;

3.8 The legislation will also bring within data protection law manual filing systems which are structured according to specific criteria relating to individuals and which allow easy access to the personal data. This definition will cover microfiche collections and sound and image data which are structured in this way.

3.9 Data subjects will also benefit from enhanced rights of compensation and redress in the courts when breaches of the law occur. 3.10 The new regime will also encourage good data protection practice. It will be a duty on the Supervisory Authority to promote this. Section 4: Results of consultation 4.1 Initial consultation on the implementation of the Directive in the UK was by means of a Consultation Paper published in March 1996. The responses were used to inform the preparation of policy proposals. 4.2 The Government's proposals for legislation were published on 31 July 1997 by the Stationery Office.

4.3 To assess the costs to the private and voluntary sectors, and local government of compliance with the Directive, a sampling exercise was carried out in three separate stages. The 13 organisations sampled in the first two stages ranged from sole traders with between two and seven staff to large organisations with several thousand employees. Also one trade body replied on behalf of its members. Sectors represented were manufacturing, services, retail businesses and charities. 4.4 The first stage in August 1996 was conducted through face-to-face interviews and over the telephone; the basis of the questions was the 1996 Consultation Paper. The second stage in June 1997 was conducted by telephone and took account of the Government's developing proposals. 4.5 The final stage used a questionnaire based on the proposals published on 31 July 1997. This time a wider range of organisations was sampled. The questionnaire was

sent to 84 organisations chosen to give a representative sample of the private and



voluntary sectors and of local government. 46 of them responded. The results of the Compliance Cost Assessment are summarised in paragraph 5.2 below, and set out more fully in the Annex to this appraisal.

4.6 In parallel with the main CCA exercise cost information was obtained from other Government Departments. These costs are also in the Annex.

Section 5: Compliance Cost Assessment Sectors affected

5.1 The legislation will affect all organisations in the public, private and voluntary sectors which process personal data held either on a computer or in a structured manual filing system. Compliance costs 5.2 Total compliance costs for the economy are estimated at £1,150m in start-up costs and £742m in recurring costs. A breakdown by different sectors is given in the Annex.

5.3 It should be noted that a 3 year transitional period is allowed after 24 October 1998 for compliance with the Directive in respect of existing processing, with a further 6 years for some provisions relating to manual data. The start-up costs are therefore unlikely to all arise in one financial year.

Section 6: Impact on small businesses 6.1 A sample of small businesses were consulted at every stage of the Compliance Cost Assessment. These included retailing, services and manufacturing organisations. 6.2 The consultation showed that the impact on small businesses was not likely to be significant. In particular many small businesses would not be required to notify their processing operations to the Data Protection Commissioner.

Section 7: Other costs 7.1 The legislation will not impose direct costs on consumers in their capacity as data subjects. However, businesses whose costs are significantly increased may pass them on in the form of higher prices to consumers. It is too soon to give any estimates of this. There may be increased costs for some voluntary organisations. 7.2 Implementation of the Directive will impose costs on both central and local

Government. The earlier consultation referred to in paragraph 4.6 above suggested that the most significant cost impact would come from the inclusion of manual files within the scope of the legislation. However, this was on the assumption that all manual records containing personal data would be covered. In practice the definition of manual data in the Government's proposals follows the Directive more closely by covering only files structured by reference to the individual and capable of easy access. This will limit the cost implications of covering manual data.

Section 8: Enforcement, sanctions, monitoring and review 8.1 The Directive requires a judicial remedy for individuals for any breaches of the rights guaranteed in the legislation, and compensation for any damage suffered because of unlawful processing. 8.2 The Government intends to make limited changes to the current enforcement

regime; responses to consultation suggest general support for the present approach.



8.3 The most significant change will be separating enforcement from notification. Under current legislation, only registered data users can be subject to enforcement

action for breach of the data protection principles. In the future the principles will be enforceable against all data controllers, whether or not they notify their processing operations to the Data Protection Commissioner. 8.4 In accordance with the Directive's requirement for a supervisory authority, the law will be monitored in the UK by the Data Protection Registrar who will be renamed the Data Protection Commissioner. The Commissioner will have powers to investigate and to collect all the information necessary to perform his supervisory duties, and to issue

enforcement notices, as now, where the principles are breached. He will also be able to engage in legal proceedings. There will also be a new power to issue information notices. Under this the Commissioner will be able to request information about a controller's processing operations, either where he has reasonable grounds for believing that the principles are or are likely to be breached or where he has received a request from a data subject to do so. 8.5 Enforcement notices will be more widely available for breaches of the principles.

Enforcement notices against a data controller will, as now, be appealable to the Data Protection Tribunal and after that to the courts. 8.6 At a European level two bodies will be established. One, the Working Party referred to in Article 29 of the Directive will have members designated by the Supervisory Authorities of the member states. It is to have monitoring and advisory status and act independently. It will examine questions covering the application of national measures

adopted to implement the Directive and give opinions on the level of protection in the Community and elsewhere. The other, the Committee referred to in Article 31 of the Directive, will have Government representatives from Member States and be chaired by a representative from the Commission. Its function will be to assist the Commission. It will have a limited enforcement role in respect of data exports to third countries. Section 9: Summary and recommendations

9.1 The UK is obliged to implement Directive 95/46/EC by 24 October 1998. It already has working data protection legislation in the form of the 1984 Data Protection Act. This appraisal has addressed only the additional costs of implementing the Directive as set out in the Government's proposals published on 31 July 1997. 9.2 Implementation costs will fall on all sectors of the economy. The corresponding benefits for data subjects of subject access to some manual records, new rights to object to processing and new avenues for seeking redress will all be provided for in the

new law. 9.3 The Government intends to keep the burdens on businesses and other organisations as light as possible, giving organisations clarity and certainty where possible but beyond that allowing them the freedom to operate efficiently. 9.4 The recommendation of this appraisal is that implementation should proceed following the proposals published on 31 July 1997. Home Office December 1997 ANNEX TO REGULATORY APPRAISAL FOR THE IMPLEMENTATION OF DIRECTIVE 95/46/EC ON THE PROTECTION OF INDIVIDUALS WITH REGARD TO THE PROCESSING OF PERSONAL DATA AND ON THE FREE MOVEMENT OF SUCH DATA

(THE DATA PROTECTION DIRECTIVE)



This annex contains estimates of the recurring and non-recurring costs to businesses, voluntary organisations, local government and central government of implementing

the Directive. These costs are additional to those incurred in applying the existing law on data protection. They are based on a sample of 46 organisations from various sectors and of different sizes within the private and voluntary sectors and local government. Our survey of central government costs was carried out separately; details are given in paragraph 13.

Sampling base

2. The organisations surveyed were:

• six local authorities:

• one representative educational organisation;

• five charities (including two of the UK's largest in terms of membership);

• four large manufacturers;

• three small manufacturers;

• ten financial and other service organisations (including a high street bank, a Building Society and an insurance company;

• eight large organisations which engage in active marketing (including a large mail order company, and transport and utility companies;

• nine retailers (including two large chains and one representative organisation).

Costs to Business 3. These have been estimated at £ 630m p.a. recurring and £836m non-recurring. This compares with costs identified to business from the questionnaires of £ 45.1m p.a. recurring and £ 58.6m non-recurring. Five business sectors have been identified separately as likely to experience significant cost pressures. These are (a) manufacturing by large firms, (b) manufacturing by small firms, (c) financial service organisations dealing with individuals, (d) large organisations such as utilities,

transport companies and large retailers which go in for "active marketing" as well as direct marketing firms and (e) retail newsagents. 4. The largest component of costs to business appears likely to fall on (d) with an estimated recurring cost of £ 302m p.a. and a non-recurring cost of £ 451m, both arising from contacts with customers ie through the Directive's requirements to give information to data subjects and to grant subject access. This estimate needs to be regarded with particular caution because of the low response rate from utilities, to offset which the total reported for them was inflated by a factor of ten. 5. Costs to financial service providers have been estimated at £ 149m p.a. recurring and £ 132m non-recurring. These too would arise from their contacts with customers. A similar but less powerful caution applies to these numbers as to those in the preceding paragraph.

6. Costs to small manufacturers arise from their relationship with employees. They have been estimated at £122m p.a. recurring and £ 153m non-recurring. 7. Recurring costs to retail newsagents appear to be small (£140,000 p.a.). However, non-recurring costs have been estimated at £ 11m. 8. Recurring costs to large manufacturers appear to be small (£320,000 p.a.). However non-recurring costs have been estimated at £ 12m.



9. It has been assumed that costs to other sectors will amount to 10% of the combined total for the five sectors identified separately. This reflects professional judgement necessary because firms in a number of sectors did not respond to

repeated requests for information. This may reflect perceptions that the costs of the Directive to them are not significant. This calculation yielded the grand total for costs to business of £630m p.a. recurring and £836m non-recurring referred to in paragraph 2.

Small Business "Litmus Test" 10. 15 of the respondents were small businesses. They fell into three categories; small

manufacturers, retail newsagents, and other small businesses (pharmacists, other retailers and providers of IT services). There was no evidence of additional costs in the last category. By contrast, some small manufacturers appeared to expect costs; these appeared to be unrelated to the relative size of the organisations concerned. (The figures in paragraph 5 reflect this, being derived from the mean estimate of costs from small manufacturer respondents multiplied by the 150,000 manufacturing enterprises with fewer than 500 employees recorded in Table 6 on pages 60 and 61 of Size Analysis of United Kingdom Businesses - approximately 150,000; the same

approach was applied to large manufacturers to produce the estimates in paragraph 7). Similarly, newsagents' costs were estimated by applying the mean cost reported to all 25,000 members of the Federation of Retail Newsagents. It should be noted that no small business predicted costs in excess of £ 10,000 p.a. recurring or £ 10,000 non-recurring and the majority expected no costs at all.

Charities/Voluntary Organisations 11. 5 charities responded to the questionnaire. 3 did not identify any cost implications. Informal advice from the Charity Commission was that around 1,200 charities (out of a total of 182,000) would experience significant cost pressures. Accordingly, to provide a rough estimate of the costs to the sector as a whole, the figures from the other two have been multiplied by 600. This yielded a recurring cost of £37m p.a. and a non-recurring cost of £120m. These costs appear to be significant though not disproportionate in relation to those incurred by business.

Local Government 12. Costs to local government were estimated through two routes. Six local authorities of varying sizes returned questionnaires and the mean estimate was adjusted to cover all 471 local authorities. This gave recurring costs of £ 26.9m p.a. and non-recurring costs of £ 97.3 m. In addition an estimate was supplied by an organisation representing secondary schools . This was multiplied by three to include primary

schools. The combined totals were £ 29.1m p.a. recurring and £ 104m non-recurring. These do not appear to be disproportionate as against the cost to business of £ 630m p.a. recurring and £836m recurring set out above or, indeed, those to central government set out below.

Central Government 13. Total start-up costs for central government were estimated at £89.7m, with recurring annual costs of £45.9m. The sampling base was 29 Government Departments, including those with the largest budgets and staff numbers. The estimates included costs to executive agencies and NDPBs where appropriate. The highest start-up cost was £59m and the lowest £0.010m; 12 departments were below £1m. The highest recurring cost was £23m and the lowest was nil; 13 departments were below £0.2m. Some departments submitted a range of figures reflecting uncertainties about the implications of the legislation. The figures used reflect the



lower figures based on the more restrictive definition of manual data included in the Bill. The higher end of the ranges was 3% above this.

Table

Overall Economic Costs 14. These are set out in the table below by broad sector. The annual recurring cost is £742m p.a. and the non-recurring costs are £1,150m. Overall Economic Costs of Implementation

Sector Recurring Costs £M p.a. Non-recurring Costs £M

Business 630 836

(of which attributable to small business)

(122) (164)

Charities/

Voluntary Organisations

37 120

Local Government 29 104

Central Government 46 90

Total 742 1,150

© Crown Copyright 1998



7. Gerry Brierley

Dip.M MA FCIM MIDM

Certified Master Practitioner of NLP

Honoured British Female Inventor and Innovator 2005

Gerry Brierley has spent 24 years in industry specialising in sales and marketing and has both large and small business experience, she holds a postgraduate diploma in marketing and an MA in strategic marketing. The dissertation, which evaluated the marketing culture within privatised industry, was published in 2001. Gerry is a specialist in marketing planning, developing strategy and managing tactical communications activity, also sales operations within many products and sectors. A member of many organisations, including, a fellow

member with the Chartered Institute of Marketing and a member of The Institute of Direct Marketing. She is an invited university lecturer, exhibition/seminar speaker and both Freeman of the City of London and Liveryman with the Worshipful Company of Marketors. In March 2003 Gerry was awarded the DTI’s SMART award grant for the creation of a marketing planning tool for small businesses called Uklick 4 marketing. Since this concept the Uklick range has been extended to provide the same concept for health and

safety ( Uklick 4 health and safety), fire safety (Uklick 4 fire safety), employment law (Uklick 4 employment law) and data protection ( Uklick 4 data protection). Thus providing a full suite of essential interactive tools for the small business. Other awards for the software include, BT broadband Britain challenge, the IAB’s International Business Enterprise Awards 2004, Honoured British Female Inventor and Innovator 2005. The Mais bursary award from The Worshipful Company of Marketors was presented in 2006 for research into marketing laws and the affect on the SME and UK economy. www.uklick.co.uk

____________

8. Intellectual Property Rights

Other than information taken from articles already available in the public domain, this paper may not be copied in part or in full without the express permission of the Author, Gerry Brierley, who may be contacted by email

at [email protected]

____________

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